The Value of Intangibles

Question: My service is really based on intangibles. How do I set my fees when I’m not delivering anything tangible?

There are several ways during a client conversation to assess the value of intangibles. I’ll cover those down below.

But first, there is a fundamental mindset shift you must make. This is critical.

Value is ALWAYS intangible.

And value is ALWAYS unique to the individual.

Here’s an example:

A diamond.

So what is the value of a diamond?

Sure, there are supposedly objective factors, like the 4Cs: color, cut, clarity, and carat weight.

These factors are used to appraise the diamond and establish some basis for cost. But cost is not value.

Let’s take a diamond and put it into two different settings.

1. An engagement ring.

2. An industrial drill.

What is the value of the diamond in an engagement ring? What does it really mean? Depending on who you ask, you’ll hear things like:

The diamond is a symbol of love and commitment.

The diamond is a symbol of status.

The diamond creates value in the experience of surprise when the ring is presented during the proposal.

The diamond creates value through the “oohs and aahs” of showing off the ring to friends. (In some cases, the flipside applies — a smaller diamond creates feelings of shame or inadequacy.)

Note that some people care about these factors a lot, others don’t care at all. All of these are intangibles and thus are entirely subjective.

Now put that diamond in an industrial drill.

What is the value?

As a tool, you can consider its hardness, durability, reliability — and how that will impact the productivity and efficiency of the user. Sure, the diamond drill bit is more expensive, but if it lasts longer and can do the job better, it’s worth it, right?

But take it a step further. What is the value of the output that is produced? In other words, what’s the value of the hole? Not just monetarily, but more subjectively. Does it produce the “best” or “finest quality” finished product, more quickly? What does that mean to you?

Hopefully this example illustrates that value is subjective and intangible — and applies to every product or service under the sun. It is not the product or service itself, it is what you can do with it and how that makes you feel about yourself. Marketers go to great lengths to influence and shape these emotions.

As a salesperson, you must elicit these values as they are always unique to the individual. I remember going shopping a few years ago to replace my wife’s car. Instead of asking questions, the salesperson made a lot of assumptions about what I would value about the car and then focused on certain features like sportiness and speed. Yet that was not what was driving my purchase — the value to me in this case was more around reliability, safety, seating capacity, and the speed of the transaction process. I finally told him — look, I will buy this car if you can get me out of here in one hour because I don’t want to spend my entire day sitting in a car dealership. Can you do that? The tangible car is a bunch of metal, rubber, plastic, cloth, and electronics. Yet the value of the same feature set or experience can be completely different depending on the individual customer.

The value of the intangibles can be derived from these questions: What does this outcome mean to you? Why is that important to you? What happens if you don’t get it? What does that mean to you?