A professor posed a riddle to his MBA students: A new device significantly shortens the time needed to complete a manufacturing process. How much is it worth?
Most students dutifully crunched the usual numbers. Cost of materials. Cost of labor and overhead. Add in a fair profit. Voilà? Not even close.
One student took a very different path. Start with how much the device saves the manufacturer. Subtract a modest margin to attract buyers. The resulting price was three times higher than most others — and it was dead-on.
The lesson isn’t academic. It’s a fundamental part of any exchange.
Is a high-powered litigator or M&A attorney really worth $1,000 an hour? Or even $500? How about a visionary CEO or clever CFO? Or an experienced Crisis & Reputation Management consultant?
It depends on what you’re buying — and how badly you need it. When much is at stake, nobody is going to settle for adequate. Brilliance is wanted, whatever the cost.
Those running public companies and nonprofits are accustomed to the calculus. They have fiduciary responsibility, but it’s not their own money. For private companies, especially small ones, the impact on their wallet is more direct.
For most people, the numbers are incomprehensible. So it’s best not to discuss them. Would just create confusion or jealousy.
Recently an executive strode into coffee shop one evening and said to a friendly barista with whom he’s on a first-name basis, “Make it extra caffeine. Been one of those days.”
The barista smiled. “Sounds like you earned a lot today. You probably make 30 times more an hour than I do.”
Realizing the potential for awkwardness, the executive smiled back: “You give me too much credit.” Situation defused.
The executive sat at a small table with his caffeine, opened his briefcase, and pulled out files. Hours to go before he sleeps. Two sides to every coin.
“Because Reputation Is Your Most Valuable Asset”
Gillott Communications is a Strategic PR firm. We’re Fixers. Crisis & Reputation Management. Litigation. Media Relations. Crisis Preparation & Training. You can reach Roger Gillott directly at 310-396-8696.
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