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The Input Value Trap

If you spend a lot of resources on producing something, that makes it more valuable.

Sounds reasonable, and I’m sometimes told it’s the only way to generate value. I disagree – a private island is valuable without any effort being spent on it.

But it gets worse. It takes a tremendous amount of practice to learn how to ride a unicycle and juggle, yet that’s not really well paid. Trading FOREX isn’t hard, but it is very risky so most people avoid it.

If my hairdresser finishes an MBA and wants to raise his prices, that makes little sense. He did work more to further his career and paid a handsome sum as well, but his getting better at business management doesn’t translate into him being able to cut my hair. Although I can be happy for him, the value of his service didn’t really change, and neither should the price. And the story doesn’t really change even if the person in question is a translator, chemist, or lawyer unless I pay them to manage a business.

There are plenty of examples where inputs matter the most, but if you are an expert service provider, your job is probably not one of them.

Working harder to generate more value is not the answer. If you are anything like the hundreds of experts I talked with, you generate plenty of value for your clients, it’s just that they only recognize a small part of it. And nobody wants to pay for the value they can’t see.

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