What am I paying for?

When considering a purchase—be it the service or product of a business, or a book and the ideas it contains—it’s helpful to ask, “What am I paying for?” Considering this question, I’ve come up with three categories of things we pay for: principle, perception or practice.

“Principle” is general insight. It is the identification and explanation of over-arching themes and patterns. For example, many books contain principles that have been distilled by an individual through decades of experimentation and involvement within specific industries and environments.

“Perception” is particular insight. It is the identification and explanation of over-arching themes and patterns manifested in specific domains. For example, a general insight for a venture capitalist could be Peter Thiel’s “Escape competition”—a central idea from Zero to One. A particular insight, related to that idea, could be how to identify a company within a young industry positioning itself to have no competitors.

“Practice” is the application of general or particular insight. It’s not generic or specific knowledge, more what to do with it. For example, I could go to a nutritional coach and ask for help. Their assistance would help me implement good habits and set up structures in my life that support said habits. I’d be paying the coach for assistance with practice, not general or tailored information.

The question works the other way around as well. As an entrepreneur, instead of asking, “What am I paying for?”, it’s valuable to ask, “What am I offering?” Is it principle, perception, or practice? General insight, particular insight, or an application of the two?