Prices

Your Product/Service Is Too Expensive!

Ever hear this complaint? Some of us offer products or services with prices that are on a par with – or even lower than – those in the traditional retail channel. However, many MLM offerings, especially those in the health and beauty markets, are sold at premium prices, and those reps may hear this kind of complaint from time to time. I believe those making it don’t understand commerce.

I make soap as a hobby. It costs me about thirty-five cents to make a bar that is equal or superior in quality to the boutique bars that sell for $3 – $5. The same is likely true of the vitamins, supplements and cosmetics that are common MLM wares. How can the higher prices be justified?

It’s important to consider everything that goes into getting any given product to market. We are all aware, of course, of the cost of raw materials and labor required to produce any good. Karl Marx thought that these are the only considerations in determining material value, but he was quite wrong. At the very least we must also take transportation costs into account. But there is more.

Real value comes from the input of the mind – imagination and creativity. Every product or service we use exists because someone first saw it in his or her mind. But even beyond that, the effort of entrepreneurs who bring these products and services to the market and connect them with those who want them add value as well, both for the producer and the consumer.

That’s you and I, folks.

For an interesting and enduring classic about what it takes to produce one of the most commonplace items imaginable, read I, Pencil, which can be found here:

http://www.econlib.org/library/Essays/rdPncl1.html

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