What is a fair price?

16. October 2008 by admin.

Here is a question from the Architecture and Interiors LinkedIn group. I thought it might be valuable for my readers.

“Hello everybody, I wanted to ask this question @ various groups to get some inside info.

3D modelling and 3D visualization is becoming very popular in the Architecture/Interior Design business as a tool for achieving different goals, from boosting the sales to convincing the end customer or the client which is the best solution.

Now my question is simple, what is a fair price that one should pay for a 3D visualization, say like the ones I have on my portfolio website www.miokon.com (just so anyone can refer to the same examples)?

What would be overpriced or underpriced? Or how much as a client you would be willing to spend on 3D modelling/visualization?

regards to all ;)”

*********My Response**************

“Price and value are subjective, as is self evident, but there is a perspective that must be obtained to arrive at the answer. The following may appear to be simplistic, but be aware of the fallacy. I will present three principles that govern in the establishment of price/value. These are not the only principles, but are essential.

First, the principle that “people are assets” should be clearly understood. This means that there is no intrinsic value in things. No matter how often an advertisement or price tag may appear to contradict things have no value. So therefore, the value of a 3D model, or a car, or a video game is zero, by itself. Value is in the people who created the object, not the object itself.

The second principle to understand is that “value follows value”. In our modern economy we use currency as a physical representation of the concept of money. This currency is one form of value. So, if I want the currency that resides in your wallet, then I will want to create something of value for you in order to get your currency which I value.

The third principle that links the previous two together is “exchange creates wealth”. When an exchange takes place, and both parties have acted in integrity, then both are equally benefited or are wealthier from the experience.

To summarize, people are assets, not things, and they establish value which in turn can be exchanged for something else of value and the two parties are mutually benefited by the experience.

So in practice we could create the following scenario. If I were to say to you that your 3D rendering is worth more than $10 to me, and you were thinking that it was worth $9 to you, we could exchange and both receive more than we gave up. You see, you would have valued the rendering less than you valued the $10, and I would have valued the rendering more than the $10.

So when you ask the question about the value of some thing the follow-up question should always be “To whom?”. There is no value in things, only in people, and value is a preference between people.

More to the point of your original question: The services and products you provide are of value to someone. The actual value is determined by their preference in the moment. If you seek to exchange with another who prefers your product more than I do you will get a better price. If you want your product to be of greater value, then create more value for the one you hope to exchange with.

When I seek to set price for a service such as yours, I’m typically constrained to the budget of the project which was previously negotiated. If that is the case than the amount that can be exchanged is dramatically smaller than if the renderings were built into the project budget. Right now there are not many projects that I have been able to convince the client they should budget for renderings. Though it continues to improve as time, technology and client wants progress.

Your technique is well developed and you have a keen eye. Keep up the good work.”

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