What is price

What is price? Price is not about value. Read on.

How prices are determined

Everyone knows that in a market economy prices are determined by supply and demand.  But what does this mean?  It means that value is subjective.  Value has no instinct measure.

Diamonds and water paradox – price

Without water we would die. But its cheap or free. But Diamonds are not connected with life, rather we ascribe a value as society has determined that they are of  magnificent value. Therefore, diamonds are expensive, water is cheap.

Prices and society

Learn from the Austrian economists,  Mises and Hayek, prices and value are subjective.  Individuals, and no one else can determine the value of something.  Therefore, learn a lesson about price and at the end of this post I have a valuable lesson for free for you.

There is no collaboration between prices and quality

This includes how much you earn.  Think of all the idiots running investment management firms. And the millions they get paid. Yet they did not know to keep their money in cash as the market was trending down. See this post -> Stock prices

Or think of all the ‘super stars’ who command big salaries yet they are very lame in singing and acting, think Madonna, Paris Hilton, for example.

Lesson from how prices are determined

Next time you sell yourself in business or market a product, remember, prices are not connected to value.   Its all how you market yourself or your product. I have seen first hand people get paid a big salary and bring companies to ruin, while hard working people get paid little to none.  I have seen products worth little sell for high prices and the converse being true. Prices are determined subjectively. And subjectively for a society is really crazy and irrational many times.

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