Here’s a reminder of the nobility and the societal value of businesses and selling.

Our world is made up of stuff. This stuff can be anything, from books to bicycles, cars and computers, food and furniture. In our society, we also have services that are available to us that we can use to get things done. Services allow us to delegate chores and leverage other people’s expertise. We are all theoretically capable of doing/making everything ourselves, but at what cost?

With all that the world has to offer, it is much cheaper in terms of saving time and money to buy a lot of the things we want and need. If you’re a farmer and you produce all of your own food, but you can produce 10x more if you had a truck, then it’s probably a good idea to get a truck. You have two options: build one or buy one.

If you opt to buy a truck, you will spend $50,000 for a brand-new, government-regulated, rigorously-tested reputable vehicle that used highly skilled craftsmen, high-tech machinery, quality materials and equipment, and intelligent processes and expertise to build. The company selling you the truck also did work to make their product compatible with most insurance companies, mechanic shops, and gas stations which are all also sold by other companies.

Building your own truck is possible but not a smart decision for most people. If you were to build your own truck using the same equipment, materials, expertise, etc., the costs would be astronomically higher. It would cost you years in time to learn and build, and thousands of dollars for machinery, materials, and tools just to produce the same truck^[1].

Another extreme example of the value businesses create can be seen in the airline industry. If you wanted to travel from Los Angeles to London without a plane, it would take 41hrs to drive from LA to New York, then take an 8-day boat ride to Southampton which is a 2hr drive to London. If you wanted to fly but didn’t use an airline service, then you could buy your own plane. The cheapest personal plane that is comfortably capable of flying across the Atlantic would cost you between $1.5 million to $2.5 million. Annual maintenance on that plane (200 flying hrs/yr) would cost around $500,000 for crew, hangar, insurance, and other typical expenses.

To avoid all that mess, you can buy what we say is an expensive plane ticket from an airline for $1,000 that will fly you directly from LA to London in 11 hours. Airlines have reduced the time and monetary cost of intercontinental travel tremendously, to the extent that it’s quite unfathomable and certainly underappreciated. They risk billions of dollars on a fleet of aircraft, staff, and planning that allows them to economically cover dozens of countries and move 10 million passengers every day. They budget all the expenses such as the airport fees, fuel, maintenance, storage, etc., and bundle that into a low single price for the customer. If that isn’t spectacular, I don’t know what is.

While that was a more extreme example with higher cost variables, customers also derive this same type of value from small-ticket items on the market. Even products as simple as pens and paper solve genuine problems for people and can be bought for far less than it would take the average person to make themself.

Businesses operate with scale and leverage which reduces the costs of goods sold, exponentially improves the product over time, and is able to produce value more efficiently than any non-established organization. A business is fundamentally a systematic machine with reoccurring processes that allows it to repeat the desired outcome for many customers. This results in more value per unit of output and reduced costs for value production which basically means that things are made more efficiently and everything you want and need gets cheaper and more accessible.

There is an age-old cliché that salespeople are sleazy. Although, the job of a salesman isn’t to convince anyone and everyone to buy what they’re selling. It’s to convince those who have a problem that their product or service solves, that their solution is better than their current alternative—because in most cases, it is.

If I’m a salesman for a pest control company, I first seek to thoroughly understand my prospective customers’ problems, pain points, and frustrations, and what they’re currently doing as a solution. Maybe they’re buying expensive stinky cans of pesticides and spraying their entire house by themselves which is very time-consuming, ineffective, and frustrating.

So I talk to each potential customer, specifically pertaining to their situation, about how exactly our solution is superior. I explain to them how we will save them time, we’re more effective at getting rid of pests, we make the process much easier for them, and our pesticide solution is better for the environment^[2].

If I do a good job at communicating the value we bring, and they think it’s worth it, then I’m doing a great justice to them. In some or many cases, I would not only be saving them time and money by switching them from their current alternative solution but will also be doing a better job at solving their bonafide problem of ridding pests in their house. It all depends on their current situation, how good I am at communicating our value, and if the value is worth it to them.

Money (the price) in the equation of paying for a product or service is simply a way of communicating how badly the customer wants the stuff. Just saying you want it “really badly” is pretty subjective and hard to measure. But saying you’re willing to pay $100 is easier to quantify because we can compare what else you can do with the $100 and how (somewhat subjectively) difficult it is to replenish $100.

Keep in mind that everyone has a different yearly income and everyone has different spending habits, so the value of $100 is relatively subjective. However, when pricing a product, it should generally be at the optimal price that will generate the most profit based on what people are willing to pay. Price it too high and you will get more per unit, but the volume will decrease. Price too low and volume will be high, but per-unit profit will be low. Find the sweet spot and you’ll get the most profit for your service.

There are a lot of potential products (startup ideas) that are superior solutions to alternatives and do provide more value to customers, but their costs require the price to be higher than what those customers are willing to pay. This is why when starting a new business, product-market fit is a pretty important consideration. If you run into this issue, you need to pivot your business plan by thinking differently. Besides, the most successful entrepreneurs aren’t looking to “fit” in.

In summary, to start or own a business is noble and to sell a product with genuine value is virtuous. You are quite literally examining people’s pertinent problems relating to something, and showing them a better solution you made that will also save them time and money. It’s only fair that you are proud of, and get compensated for your work.

[1] This is assuming you’re not a mechanical engineer. Everyone is an expert at something, but we can’t know everything. The things that you don’t know how to do/make, you’re much better off buying them from the market if you need/want them.

[2] The Behavioral Change Stairway Model, developed by the FBI’s hostage negotiation unit, shows the 5 steps to getting someone else to see your point of view and change what they’re doing:

1. Active Listening: Listen to their side and make them aware you’re listening.
2. Empathy: You get an understanding of where they’re coming from and how they feel.
3. Rapport: Empathy is what you feel. Rapport is when they feel it back. They start to trust you.
4. Influence: Now that they trust you, you’ve earned the right to work on problem solving with them and recommend a course of action.
5. Behavioral Change: They act. (And maybe come out with their hands up.)

In all likelihood you usually skip the first three steps. You start at 4 (Influence) and expect the other person to immediately go to 5 (Behavioral Change).

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