So what’s it worth anyway?

Even in the world of business and finance, you’d find that there’s no single measure of value. Want to judge how good a project is? You’ll find IRR, NPV and a whole bunch of other metrics to evaluate it. Buying a business? Would you look at liquidation value, going concern, discounted cash flow or something else?

Or back to something simpler : buying a home. Replacement value? Income / return? Or comparison with the rest of the neighborhood?

Quite often, it’s seemingly irrelevant factors that define value, for a buyer. Back to the home example. School districts. Distance to your place of work. Nearness to parents or in-laws (or distance if you don’t want them around!).

Or for a seller. How long you’ve stayed there? Or are there happy memories associated with it? Have you spent hours doing it up to the last inch? No one else is going to place a value on these like you do.

At best, there are conventionally accepted measures of value that you could reference, for a yardstick. But that doesn’t make it foolproof - it’s just another way to evaluate.

That’s the key to building value. Find ways and means to get something at lower prices - and sell it to people who value it a lot more.

Written by 2cworth on April 22nd, 2006 with no comments.
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