Cost Basis vs. Convenience Basis
Building Value: The Power of Convenience
Understanding what drives a product's value is key when presenting it. While cost and features/benefits play a role, there are situations where convenience and the value of time become the defining factors. Let’s explore this concept through the example of a bottle of water.
The Same Product, Two Experiences
Imagine you’re thirsty and need a bottle of water. Whether you buy it at Costco or Disney World, the product is the same: water in a plastic bottle. The features (it quenches thirst, it’s easy to carry) and benefits (it keeps you hydrated, you feel better) are identical. What changes is how the convenience of the experience and the value of your time influence its perceived worth.
Costco: Cost-Based Value
At Costco, you can purchase a case of 40 bottles of water for around $4, making each bottle just $0.10. The value here is driven by cost—an unbeatable price for the quantity you’re receiving.
Disney World: Convenience-Based Value and Time
Now, picture yourself at Disney World. After walking for hours in the sun, you’re parched and need a bottle of water immediately. At Disney, a single bottle of water costs $7.00. Why is the same water 70 times more expensive than at Costco?
Let’s calculate the percentage difference:
• Cost at Costco: $0.10 per bottle
• Cost at Disney: $7.00 per bottle
• Percentage Difference:
The price at Disney represents a 6,900% increase over Costco!
Why the Huge Difference?
The answer lies in two factors: convenience and the value of your time.
• Convenience: At Disney, water is readily available, eliminating the need to leave the park, find a store, and return, which could take a significant amount of time.
• The Value of Time: Your time is incredibly valuable at this moment. You’re paying a premium to save minutes or hours that could be better spent enjoying the park with your family or friends.
The high price of water at Disney isn’t about the product itself—it’s about the value of convenience and the time it saves.
Applying This Lesson to Your Menu Presentation
When presenting products, emphasize how convenience and the value of time justify the cost. Here’s how:
1. Frame the Need: Help customers imagine a scenario where they need your product, such as a flat tire, a breakdown, or an unexpected repair. Highlight how inconvenient and time-consuming it would be to handle these issues independently.
2. Show Time Savings: Explain how your product reduces hassle and saves time. For example, a vehicle service contract eliminates the need to research repair shops, negotiate costs, or wait for a fix—you’re covered and back on the road faster.
3. Provide Peace of Mind: Reinforce how the convenience of your product reduces stress and lets customers focus on what matters most.
Value Beyond the Price
Sometimes, the most significant value isn’t in the product itself, but in the experience it provides. You can create a compelling presentation by showing customers how your product simplifies their lives, saves time, and reduces hassle.
So, remember the $7 bottle of water next time you present. It’s not just about what’s inside. It’s about the 6,900% increase in value created by convenience and the time it saves when you need it most.
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