Consumers, not businesses, determine value

We’ve done our fair share of picking on Bank of America and their botched move to charge customers a $5 monthly fee for the use of their debit card, but there’s an important lesson for businesses in this story.

Consumers, not businesses, determine value.

It’s easy to predict how the decision to roll out this fee was made in the board room, because corporations, small business owners and individuals get caught up in wrong-headed thinking all the time.

It’s not at all implausible that the conversation in the board room went something like this:

“Customers are not paying for their debit cards, but they should be. There’s real value in that debit card product. It’s made it easier for consumers to do business and pay for products, and they don’t have to visit ATM machines or carry any cash at all. Why shouldn’t that be something that customers pay for?”

For consumers, however, there isn’t value in that debit card. Other banks have made it available for free. In the minds of consumers, they shouldn’t pay for it. It’s just something a bank has to provide if they want your checking account business.

One must understand that it is never the seller that determines value; it’s always the buyer.

Thinking otherwise is not just a problem with corporations or small business owners, it also affects individuals. Outside of the business world, the thought process might go something like this:

“These people only want to pay me [insert salary here]. For what I do for this company, and my skill set, I’m worth much more than that. I mean, I have a degree!”

The truth is, however, you’re only worth whatever amount you threw out if you can actually get that salary from someone. Otherwise, your line of thinking is no different than Bank of America’s.

If you want to get more, you have to offer more, and you have to offer more in the areas that are most important in the minds of the people utilizing your product. To ask for more under any other circumstance will quickly find you rejected by your buyer, whoever that may be, and in this world, the buyer is the only thing that matters.

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