Assigning Value: What You Need/Want
6/20/2012 1:20 PM
I recently re-watched an old Twilight Zone episode from Season 1 titled “What You Need.” In it, an old street peddler happens to know the exact thing that people “need” to help their lives in some way. He gives one guy a pair of scissors and the guy wanders around wondering what the scissors are for…until his scarf gets caught in an elevator and he is getting choked to death until he remembers the scissors that he uses to cut himself free. He then is, of course, a believer in the old man, and he returns for something else he “needs.” The man hands him a leaky fountain pen and the guy at first is all, “What?! This is what I need, old man?! A leaky fountain pen?! Why do I need this?!” His value in the pen is zero. Unless anger is a value. But then the pen leaks a single drop of ink that lands next to a horse’s name in the newspaper. The guy bets on the horse, the horse wins, and he makes a bundle. All of a sudden, the pen was a lot more valuable. (Then the old man gives him a pair of slippery, leather soled shoes. The guy puts them on, slips in the street and then gets hit by a truck. Because that was what the old man needed. Classic Zone!)
This made me think of an e-mail I received from a fellow AV journo who asked me to help her weigh-in on a review. She was reviewing a very specialized custom installation product – a motorized TV mount for lowering a large TVs up to 200 pounds down in front of a fireplace – that was quite expensive – around $3600 – and she had to assign the product a value rating and wondered what I thought. To the guy with the cash that *has* to mount a 70-inch TV high above his fireplace but wants to have his TV in the perfect viewing position when watching, it’s got a lot of value. To the rest of the world, it’s an outrageously priced folly.
So how do you give that value a numerical value?
In truth, assigning “Value” is one of the things that I always struggle with when completing a review. Value – along with Performance and Features – is one of the three criteria that determines the overall scores for my reviews. (The three, 1-10 scores are then averaged to determine the overall rating.)
In some cases, value is really easy. Something performs amazingly, has a ton of features and has a low price.
For example, I just finished reviewing the Dish Network Hopper and Joey satellite system. The system performed flawlessly, had cutting edge, market-leading features, AND is often totally free to Dish subscribers. So, you had an amazing performer (10), with incredible features (10) that is also usually FREE, meaning it was an obvious 10 for value. (Also, the first product that I ever awarded a score of perfect 10s across the board.)
In other cases, a lower value is obvious. High price, middling performance and lacking feature set.
Example deux: I recently reviewed a NAD music server that offered good performance (I gave it an 8 ), but really lacked on features (no AirPlay, no high-res audio support, no Pandora, no Spotify, no Rhapsody, no HD Radio, no control app, no video display, which altogether meant that I gave it a feature rating of 4) and a carried a relatively high price ($800) in its category. Compared to a Sonos system, the high price and lacking features meant that I felt it wasn’t really a good “Value” so I gave it a rating of 4.
But many times, the value rating is more arbitrary; just a number that feels right to me based on the cost, the performance and the features and what other products in the same performance range would cost.
But assigning “value” gets especially slippery as you start talking about high-end products. Products that often offer incremental performance increases or perform very specialilzed tasks often in exchange for stratospheric prices.
Take PS Audio’s PerfectWave DAC. I felt it was one of the most sonically impressive components to ever grace my rack, causing me to write, “To put it simply, PS Audio’s PerfectWave DAC produced the most significant audio improvement of any component I’ve ever added to my system. Even when listening with my 15-year-old-plus CD player as a source, the sound was revelatory.” I gave it a Performance rating of 10 and a Features ratting of 8. At $3000, this DAC can hardly be considered a “value” by the vast majority of the public. I bet my dad wouldn’t pay $100 for it. Wait. Let me rephrase that. I *know* my dad wouldn’t pay $100 for it. (A $600 dinner for two at The French Laundry? Yes. But $100 for state-of-the-art digital-to-analog conversion performance? That’s gonna get you a stern head shaking and an "Oh, son...") But to audiophiles who pay thousands for power and speaker cables, the PerfectWave would likely be a bargain basement steal. I Valued it at an 8.
Or how about Meridian’s DSP3200 bookshelf monitor speakers coupled with the Sooloos MediaCore 200 server. That duo sounded amazing, had gorgeous build quality and I called it “the ultimate minimalist system.” Performance was a 9 and Features an 8, but at $10,000 for the combo, tough to call it a “Value.” Except if you wanted an amazing, no compromise audio system with virtually no visible gear at all. Then it’s a real value. So I gave it an 8 also.
Another perfect example of the impossible to value-fy is Kaleidescape’s movie server system. I *love* Kaleidescape, and we generally use our system every day. It offers stellar performance that is on parity with the highest performance disc players I’ve reviewed. It has wonderful scaling, impeccable Blu-ray quality, and lightning fast start times unmatched by, well, anything. Kaleidescape also has features that no other system on the market can even think about approaching…an all-world GUI, bookmarking the most iconic scenes from top films, a special kid’s mode, rock-solid performance, etc. But it’s just impossible to call a $20,000 Blu-ray serving system a “value.” Especially when it essentially does the same thing – playing movies – as products that sell for $100. And even at 1% of the current price, my dad would probably still be on the fence. (Not such a huge lover of the technologies, my father.) Except, if you owned hundreds of DVDs and Blu-rays and thousands of CDs and have the money and have been looking for a way to manage your collection in the most elegant way possible and with zero loss of quality. Then, like that leaky fountain pen, it has incredible value.
The high-end of anything is always a sketchy world when talking value proposition. To those with the need and the desire, the value of something they want is high. Another person can look at the same object and see no value whatsoever. And just wasted money.
Luxury watches are another perfect example. It is a multi-million (billion?) dollar annual business, but one that is -- let's be honest -- completely unnecessary. A selection of watches can be had at Wal-Mart for $10-20. They tell the time. (Actually, pretty well.) And lots of them have features like stopwatches, calendars, timers, alarms, calculators, etc. My Rolex Submariner – a relatively “cheap” watch by Rolex standards – costs many times that and the only “complication” it features is a date window. Probably doesn’t keep as good of time as those Wal-Mart watches either. (It runs fast.) Does it have a better build quality? Sure. It has a comfortable stainless steel bracelet with diver’s extension, synthetic sapphire crystal that is virtually impervious to scratching, self-winding “perpetual” movement and a 1000 foot waterproof rating. And I’ve worn it on my wrist non-stop every day for 12 years so far and it hasn’t missed a beat. But a value? No way. (Though, if I live a million years, I just might recoup my money on all money I saved on never having to buy a watch battery again. So, there’s that.)
But it holds immense value to me. Because I wanted that watch for *years* and finally being able to own it means a lot. To me.
The “value” comes in pride of ownership.
And I can guarantee you that when you go to the Rolex dealer the word “value” never comes up. It is more things like “quality” and “brand” and “lifestyle” and “style.”
When talking to prospective clients, they often say, “What do I need for my system,” and I usually reply – somewhat jokingly – that they don’t actually *need* any of it; there is nothing that I sell that is actually necessary. But if they *want* something, and you can demonstrate the superior features and performance of a product and how it will improve their lifestyle, then you can help them to see the value in it. The better speakers, the better TV, the automated lighting, all of it.
People know value when they see it. Sometimes, it’s just hard to put a number on it..
1 comment(s) so far...
By Bob Pankratz on
6/20/2012 5:50 PM
Re: Assigning Value: What You Need/Want
Thanks for the great article John. A good reminder that our entire industry exists/relies almost exclusively in/on the discretionary income realm. Back in my retail audio store (before there was consumer video outside of TV's, i.e.shortly after the earth cooled) we used to explain it to customers like this: if/when audio performance becomes more important to you, you will reach a point where increasingly larger amounts of money will buy incrementally smaller increases in performance; but those smaller increases in performance will become increasingly important to you and hence worth the increasingly larger amounts of money. Probably still holds true today.