Value Definitions

• Perceived value is an unsubstantiated estimation of worth that the customer obtains or could potentially obtain from owning and using a product.

• Actual value is the measured and validated worth that customers factually obtain from owning and using the product.
  • Actual value is always based on actual components.
    • Measured benefits and price.

• Functional worth is the lowest cost to provide a given function.

• A basic function is anything that makes the product work.
  • A basic function cannot change.
    • Otherwise, it is a different function.

• A product feature is a secondary function.
  • Product features can be enhanced to increase functionality.
  • Product features can be modified or eliminated to reduce product cost.

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© 2008 John Michael Pierobon

Notes