Who wins in a transaction?
Posted: Sun Dec 22, 2024 9:45 am
Every time you sell or buy something, everyone wins (both the seller and the buyer). The seller wins because he gets paid for what he sells (and if he lost out on the transaction, he would stop selling). The buyer wins, because if he is willing to pay a certain amount for a good, it is because he values it more than the price he is being charged. In other words, a transaction is usually a win-win situation. You should know then that, as a business owner, you play a very important social role, since you philippines business mailing list create value that many people benefit from!
Creating value
Every time a transaction occurs, value is created. For example, imagine a customer is looking for a place to have lunch, and is willing to pay up to $5,000 pesos. If they were charged more than $5,000, they would consider it excessive, and would feel uneasy about having to pay so much for food. Therefore, they would prefer to go hungry and not buy. If they were charged less than $5,000, the customer will feel more satisfied the less they are charged, because it is money they “save” (they were willing to pay $5,000 and they charged them less).
On the other hand, if a vendor costs, say, $2,400 per lunch, then he is willing to sell for more than that. The more expensive he can sell for, the better for him. But he will not be able to sell for more than $5,000, because that is the maximum amount his customer is willing to pay.
This situation can be seen in the following graph:
If we stop thinking about the seller and the buyer, and look at it “from the outside” as a society, we can say that there is a creation of value in this exchange. The seller wins for each exchange over $2,400, and the buyer wins for each exchange under $5,000. Therefore, a value of $2,600 is created in this exchange.
This suggests a social role for the company, since by providing goods and services to society, it not only obtains its profit goal, but also generates satisfaction and well-being among its consumers.
Capturing value
The value created can be captured by both the company and the customer. It is clear that if the lunch is sold for $2,400 then it will be the buyer who captures all the value. If the transaction occurs at $5,000 then it will be the seller who captures the value.
Let's imagine that the lunch ends up being sold at a price of $4,000 plus tip. In this case, the value created will be captured as follows:
Have you ever felt uncomfortable raising prices or charging a little more? Many people do, because they think it could be an abuse! However, they should consider that their work is good for society, and it is fair to charge for it. No one is forced to buy, and in general, customers are free to choose another option if they do not like what you offer.
Creating value
Every time a transaction occurs, value is created. For example, imagine a customer is looking for a place to have lunch, and is willing to pay up to $5,000 pesos. If they were charged more than $5,000, they would consider it excessive, and would feel uneasy about having to pay so much for food. Therefore, they would prefer to go hungry and not buy. If they were charged less than $5,000, the customer will feel more satisfied the less they are charged, because it is money they “save” (they were willing to pay $5,000 and they charged them less).
On the other hand, if a vendor costs, say, $2,400 per lunch, then he is willing to sell for more than that. The more expensive he can sell for, the better for him. But he will not be able to sell for more than $5,000, because that is the maximum amount his customer is willing to pay.
This situation can be seen in the following graph:
If we stop thinking about the seller and the buyer, and look at it “from the outside” as a society, we can say that there is a creation of value in this exchange. The seller wins for each exchange over $2,400, and the buyer wins for each exchange under $5,000. Therefore, a value of $2,600 is created in this exchange.
This suggests a social role for the company, since by providing goods and services to society, it not only obtains its profit goal, but also generates satisfaction and well-being among its consumers.
Capturing value
The value created can be captured by both the company and the customer. It is clear that if the lunch is sold for $2,400 then it will be the buyer who captures all the value. If the transaction occurs at $5,000 then it will be the seller who captures the value.
Let's imagine that the lunch ends up being sold at a price of $4,000 plus tip. In this case, the value created will be captured as follows:
Have you ever felt uncomfortable raising prices or charging a little more? Many people do, because they think it could be an abuse! However, they should consider that their work is good for society, and it is fair to charge for it. No one is forced to buy, and in general, customers are free to choose another option if they do not like what you offer.