12 Forms of Value

12 Forms of Value
Economic Value comes in 12 Varieties
1    Product

1.    Business needs to Sell and Deliver for more than it costs to make
a.   Product needs to be duplicated/multiplied
b.    Tangible value/item people want.
c.    Inexpensive acceptable quality
d.    Sell as many as possible for the highest price
e.    Inventory for orders
i.    Example
ii.    Books; must be sold for more than it costs to create print and distribute.

2    Service
1.    Business needs to provide
a.    Assistance for a fee while benefiting the user
b.    Skillful employees required
c.    High quality
d.    Attract and retain customers
i.    Example
ii.    Barbershop; difficult to develop and duplicate and high skill.

3    Resource
1.    Business needs to
a.    Charge for Access to Access
b.    Asset for many, charged for use
i.    Asset people want
ii.    Serves as many without affecting quality or experience
iii.    Charge to maintain and improve
iv.    Example
v.    Gym/ Museums
vi.    Service
vii.    Subscription
viii.    Access Fee
ix.    Bundling
x.    Reputation

4    Subscription
1.    Business needs to provide
a.    Consumable Content
b.    Benefits for a recurring fee
c.    Expectation of value
d.    Fees until canceled
i.    To have a successful subscription you need to be
ii.    Predictable
iii.    Renewable
iv.    Significant value on a regular basis
v.    Base + New Subscribers for Attrition
vi.    Bill Recurring
vii.    High Retention

5    Resale
1.    Wholesale to Retail at a Gain
a.    Resell for more than it costs
b.    Bulk and inexpensive product
c.    Maintain good condition until sale
d.    Purchasers a.s.a.p. (to keep inventory costs low)
e.    Sell high at a multiple of 10X
i.    A Farmer doesn’t sell his apples individually.

6    Lease
1.    Charles Lamb wrote “Human species is composed of two distinct races: the men who borrow and the men who lend.”
a.    Access to Asset for a predefined amount of time for a fee
b.    Assets allow others to use for a predefined time, for a fee.
i.    Asset people want
ii.    Lease on favorable terms
iii.    Protection of loss or damage
iv.    Usage for less than purchase price
v.    Revenue must cover purchase price before it wears out or is lost.
vi.    Plan for repairs and replacement

7    Agency
1.    Filters for buyers, marketing and sale of assets you don’t own.
2.    Sell Service/ Asset you don’t own on behalf of a third party.
a.    Sellers benefits from sales
b.    Earns on commission or fee
i.    Seller, who has the valuable asset
ii.    Trust with buyer
iii.    Negotiate Terms of sale
iv.    Collect
v.    Fee or commission

8    Audience Aggregation
1.    Sell attention of a group with certain characterizes to a business/third party
a.    ID group with common characteristics
b.    Create and maintain the groups attention
c.    Find Buyers
d.    Sell Access
e.    It benefits audience
i.    Example
ii.    Magazines
iii.    Ads allow for better focused content to sell to businesses

9    Loan
1.    Payment + interest over time: lending money
a.    An agreement to use resources
b.    Borrower pays lender payments over time + interest
i.    You’ll need
ii.    Money to Lend
iii.    Borrowers
iv.    Interest Rate
v.    Protection

10    Option
1.    Gives the ability to take action without requiring that action.
2.    Predefined Action for a fixed period for a fee
a.    Concert/Movie Tickets
b.    Action people want in the future
c.    Right to Action before a deadline
d.    Convince option is worth asking price
e.    Specified deadline on taking action

11    Insurance
1.    Transfer of risk to seller for taking risk, the policyholder gives insurer payments.
a.    Risk of a Bad thing for payment
b.    Binding legal agreement risk (loss) from policy holder to you
c.    Estimate the risk using available data
d.    Collect a series of payments
e.    Pay claims on policy
i.    Insurance provides value to the purchaser by protecting from risk.
ii.    More premiums collected, fewer claims more money.

12    Capital
1.    Hierarchy of Function
a.    Ownership stake in a business with a one time payout
b.    Expand/New Markets
c.    Angel Investing/Venture Capital
d.    Purchasing Stock
e.    Resources to Invest
f.    Business to Invest
g.    Business Worth
i.    Future Value
ii.    Go under Option
h.    Ownership in exchange of Capital gathering resources to expand