The Concept of Value and It's Types

The first thing to know about value is that it's a human idea. It's like an idea that depends on the situation and can changes. Except for the things we needs to live, like air, water, and food, which everyone needs, everything else has a value that depends on culture, how much is available, and what people wants.

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There are two main types of value: inherent or utility value, which is about how useful a product or service is for our needs, and market value, which is the price in money when you wants to trade it.

1. Inherent Value

Inherent value is about how good a product or service is. It's a bit subjective because people are different and have different needs, so they sees things differently, and that affects how valuable they thinks something is.

Things that helps us save money, time, or energy are usually seen as valuable. Also, things that helps us relax, feel good about ourselves, or seems important, even if that's a bit hard to measure. We tends to value things more when they really solves our needs, and as our needs changes, so does the value.

2. Market Value

Market value matters when you want to exchange something, and it's about how good a product or service is, plus other things like how many there are and how much people wants it. In a free market, prices are mostly decided by the supply and demand, which depends on how much people needs a product or service and how much is available.

But, we needs to be realistic and thinks about advertising because it plays a big role in how people sees value and are willing to pay more for a famous brand. On the other hand, brands tends to lower their prices when there's competition. So, market value is a price that changes based on more than just supply and demand.

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Let's looks at a real example to understands utility value better. Before engines and cars were invented, horses were really important because they were used for transportation and farming. But when cars and tractors becomes reliable and affordable, there were way fewer horses needed.

In 1915, there were about 20 million horses in the United States, but by 1959, there were only about 4.5 million. This change in the value of horses happened because people found a better way to meets their transportation and farming needs.

This doesn't means horses have no value now; some people still uses them for farming to be environmentally friendly. In their personal view, horses are still very useful. The same thing is happening today in our digital economy as digital products and services becomes more valuable by solving more needs.

Important Value Takeaways:

✓ Value is a bit different for everyone and depends on the situations.

✓ Inherent value and market value comes from how a product or service meets specific needs.