Forms of Value in Business.

1. FORMS OF VALUE FOR
BUSINESS
Excerpts from The Personal MBA by Josh Kaufman

2. Forms of Value
• Product
• Service
• Shared Resource
• Subscription
• Resale
• Lease
• Agency
• Audience Aggregation
• Loan
• Option
• Insurance
• Capital

3. Product
• Create some sort of tangible item that people want.
• Produce that item as inexpensively as possible while
maintaining an acceptable level of quality.
• Sell as many units as possible for as high a price as the
market will bear.
• Keep enough inventory of finished product available to
fulfill orders as they come in.

4. Product examples

5. Service
• Have employees capable of a skill or ability other people
require but can’t, won’t or don’t want to do themselves.
• Ensure that the service is provided with consistently high
quality.
• Attract and retain paying customers.

6. Service examples

7. Shared resource
• Create an asset people want to have access to.
• Service as many users as you can without affecting the
quality of each user’s experience.
• Charge enough to maintain and improve the shared
resource over time.

8. Shared resource examples

9. Subscription
• Provide significant value to each subscriber on a regular
basis.
• Build a subscriber base and continually attract new
subscribers to compensate for attrition.
• Bill customers on a recurring basis.
• Retain each customer as long as possible.

10. Subscription examples

11. Resale
• Purchase a product as inexpensively as possible, usually
in bulk.
• Keep the product in good condition until sale – damaged
goods can’t be sold.
• Find potential buyers of the product as quickly as possible
to keep inventory costs low.
• Sell the product for as high a markup as possible,
preferably a multiple of the purchase price.

12. Resale examples

13. Lease
• Acquire an asset people want to use.
• Lease the asset to paying customers on favourable terms.
• Protect yourself from unexpected or adverse events,
including the loss or damage of the leased asset.

14. Lease examples

15. Agency
• Find a seller who has a valuable asset.
• Establish contact and trust with potential buyers of that
asset.
• Negotiate until an agreement is reached on the terms of
the sale.
• Collect the agreed-upon fee or commission from the
seller.

16. Agency examples

17. Audience aggregation
• Identify a group of people with common characteristics or
interests.
• Create and maintain some way of consistently attracting
that group’s attention.
• Find third parties who are interested in buying the
attention of that audience.
• Sell access to that audience without alienating the
audience itself.

18. Audience aggregation examples

19. Loan
• Have some amount of money to lend.
• Find some people who want to borrow that money.
• Set an interest that compensates you adequately for the
loan.
• Estimate and protect against the possibility that the loan
won’t be repaid.

20. Option
• Identify some action people might want to take in the
future.
• Offer potential buyers the right to take that action before a
specified deadline.
• Convince the buyer that the option is worth the buying
price.
• Enforce the specified deadline by taking action.

21. Options

22. Insurance
• Create a binding legal agreement that transfers the risk of
a specific bad thing (loss) happening from the policy
holder to you.
• Estimate the risk of that bad thing happening, using
available data.
• Collect the agreed-upon series of payments or premiums.
• Pay out the legitimate claims upon the policy.

23. Capital
• Have a pool of resources available to invest.
• Find a promising business in which you’d be willing to
invest.
• Estimate how much that business is currently worth, how
much it may be worth in the future, and the probability that
the business will go under, which would result in the loss
of your capital.
• Negotiate the amount of ownership you’d receive in
exchange for the amount of capital you’re investing.

24. Recap
• Product - Create a single tangible item or entity, then sell and deliver it for more than what it cost to make.
• Service - Provide help or assistance then charge a fee for the benefits rendered.
• Shared Resource - Create a durable asset that can be used by many people, then charge for access.
• Subscription - Offer a benefit on an ongoing basis, and charge a recurring fee.
• Resale - Acquire an asset from a wholesaler, then sell that asset to a retail buyer at a higher price.
• Lease - Acquire an asset, then allow another person to use that asset for a pre-defined amount of time in exchange for a fee.
• Agency - Market and sell an asset or service you don’t own on behalf of a third-party, then collect a percentage of the
transaction price as a fee.
• Audience Aggregation - Get the attention of a group of people with certain characteristics, then sell access in the form of
advertising to another business looking to reach that audience.
• Loan - Lend a certain amount of money, then collect payments over a pre-defined period of time equal to the original loan
plus a pre-defined interest rate.
• Option - Offer the ability to take a pre-defined action for a fixed period of time in exchange for a fee.
• Insurance - Take on the risk of some specific bad thing happening to the policy holder in exchange for a pre-defined series of
payments, then pay out claims only when the bad thing actually happens.
• Capital - Purchase an ownership stake in a business, then collect a corresponding portion of the profit as a one-time payout
or ongoing dividend.