Why This Cell Phone Sold for $1.3 Million

Goldvish

Why would anyone pay $1.3 million for a cell phone?

Only one reason: because, to them, the cell phone is more valuable than $1.3 million.

The Le Million, developed by Goldvish, is the most expensive cell phone in the world, according to The Guinness Book of World Records. It’s handcrafted, constructed from 18 carat gold, and mounted with 120 carat diamonds.

Still, how do you justify $1.3 million? And more importantly, how can you convince other people to pay you so much money?

Price vs. Value

In most people’s minds, value means the same thing as price. If the price tag says $9.95, then it’s worth $9.95. We’re taught by a Wal-Mart type shopping culture, where you buy something for what they’re asking or you don’t buy it at all.

But in reality, value works a little differently.

If you think the price is higher than the value, then you don’t buy it. For instance, let’s say you’re shopping for a new pen. The price tag says $9.95. “That’s awfully high for a pen,” you think, so you buy a cheaper one instead.

To you, the price of the pen was greater than its value to you. Or, put another way, $9.95 was more valuable to you than the pen.

We can also reverse the situation. Now imagine that you’re a pen connoisseur, making a quick run into the store to find the highest quality pen available. You scan the pens for sale and pick the one selling for $9.95 to be the highest quality. “This is a good deal for a pen like this,” you think to yourself, so you take it to the cash register and buy it.

In this case, the price is lower than the value, or $9.95 is worth less to you than the pen. You gladly trade your money for it because the pen is worth more to you.

Make sense? If not, think about it as a scale.

The Value Scale

Imagine for a moment that we have a special scale, one that weighs the value you place on each item and lowers the “heaviest” scale_balanced.jpgone. When you’re thinking about buying something, you put the money on one side of the scale and the product on the other. Depending on which one you want more, the scale tells you whether or not to buy.

The scale answers the question, “Is it worth the trade?” After all, that’s what we’re talking about: trading money for something that you’re considering buying. The only way you’ll consent to the trade is that, to you, whatever you’re trading for is worth more than the money, making it dip lower on the scale.

Let’s go back to the example of the pen that’s for sale for $9.95. We put them on our scale, and what happens?
scale_money.jpg
If you’re just browsing for a workable pen to take notes, then the craftsmanship is irrelevant to you. It has no value. Your money, on the other hand, might have significant value. If you’re making $10 per hour, then the price of $9.95 represents an hour of your life. Because the money has higher value, it is heavier on the scale.
scale_pen.jpg
On the other hand, let’s say you just got promoted. You’re moving into a big, luxurious office with a high-end desk, and you can’t imagine continuing to use those cheap, disposable pens. You’re looking for something nicer, but still reasonable. When you see the $9.95 pen, its value is high. If you’re making $50 or more per hour, then the $9.95 is also a small sacrifice. Because the value of the pen is higher than the value of the money, the pen dips lower on the scale.

You can do this exercise with any sort of product… including a $1.3 million cell phone.

Why the Cell Phone Sold for $1.3 Million

The rumor is, a Russian businessman bought the cell phone for his wife. Nothing I can find says exactly why he bought it for his wife, but we can certainly make some interesting speculations.

If you’re a diehard investor, you might believe that he bought it because he thought it would go up in value. Here, the value of the phone would be derived from the belief that other people would perceive it to be worth more than $1.3 million in the future.

If you’re a romantic, you might believe that the man was making a statement to his wife: that he wanted to give her all of the finest things in life. Here, the value of the phone would be derived from the love for his wife.

If you’re a cynic, you might believe that the man was recently caught having an affair. The wife was threatening him with a scale_phone.jpgdivorce, so instead of facing a divorce, he bought her a breathtaking gift. Here, the value of the phone would be derived from avoiding the cost of divorce.

Regardless of how you look at it, the main point stays the same. He put the $1.3 million and the cell phone on his own mental value scale, and the cell phone was heavier. So he bought it.

How Can I Make This Worth More Than It Costs?

You can condense the entire value scale theory into one question: how can I make this worth more than it costs the customer?

If you’re selling a pen for $9.95, then figure out how to make it worth more than $9.95 in the mind of your target customer.

If you want a job paying $100,000 per year, then figure out how to make yourself worth more to the company than $100,000 per year.

If you’re selling a cell phone for $1.3 million, then figure out who is willing to pay that much money and convince them it’s worth more.

Not only will you create lots of happy customers from thinking about value in this way, but you’ll also put more money in your pocket, assuming you have a healthy enough margin.

So let me ask you… how does the value scale look for this blog? Which is more valuable: the advice or the time it costs you to read it?

If the advice is more valuable, then why not go ahead and subscribe? After all, the value scale says you should.