Asset Management

Price Versus Value

The concepts of price and value are often treated as though they were the same thing, but they’re not. Price is the cost of what you’re buying. Generally it is not set by you, the buyer, but by the seller. The value of the item is much more abstract. It is determined by the buyer, and can vary widely depending on the buyer’s perceptions and needs.

Imagine a valuable painting. If it’s sold, a specific price is put on it and the buyer pays it. But if that painting is exceedingly rare, or was painted by the buyer’s favorite artist, or is the last piece needed to complete the buyer’s collection, then the value to the buyer is likely to be much higher than the seller’s price.

So it is in any industry. The price of a piece of machinery may be one thing, but the value of it – especially if that piece of machinery is used in the manufacture of thousands or even millions of goods – is quite another.

What about the reverse? What if a business buys a piece of machinery or equipment, only to discover that it’s of little, if any, value to the business? That’s when it’s a good time to call a company like EquipNet, which can arrange to sell, redeploy, or auction off the equipment in question. The equipment may not have value for one business or facility, but may be invaluable to another.

Remember — price is what you pay, value is what you get.

Categorias: Asset Management

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