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Content: Earlier this year, in response to yet another editorial somewhere where someone insisted that if something has a price of zero, it means...
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Understanding The Difference Between Price And Value; Product And Benefit
Say That Again
from the let's-try-this-againdept
Thu, Aug 21st 2008 3:05am—
Mike Masnick
Earlier this year, in response to yet another editorial somewhere where someone insisted that if something has a price of zero, it means that people don't think it has any value, we pointed out that price and value are two different things. Price isn't determined by value -- it's determined by the intersection of supply and demand. Value plays into that, by determining what the demand part is. That is, if I value widget X at $10, then I'd be willing to pay anything less than $10 for it. If the intersection of supply and demand prices widget X at $5, it doesn't mean that I value it at $5, but it does make it likely that I'll buy it. The same is true if the market prices it at $0. It doesn't mean I place a $0 value on it. It just means it's worth getting at that price, since it's below what I value it at.