Having options for flexibility has great value. And we often forget to value them, or to get ‘free’ options at our hand when we can.
In finance, options valuation has been implemented for the last few decades – it allows to calculate the price of options to buy or sell equities or currencies in the future. There is even a specific field that looks into Real Options (tangible options in real-life decision-making) and attempts to give a value to those options.
Without going into the details of these approaches, which are sometimes tedious and rely on some parameters and statistical approaches that can always be discussed, let us note here that having an option to do something, in other terms to have flexibility in the future, has got a value, and that we often underestimate that value – or worse, we give it out for free.
In my commercial approaches I always try to keep as many options open as possible. Less flexibility imposed by a client needs to be compensated. Options at the hand of the client need to be compensated. It is not always easy to get the client to understand, but it is a key practice.
Options have value. Don’t give them away. Try to have as many as possible and keep as much flexibility as possible.
