Value bet

A value bet is a bet you want to be paid. Your hand is stronger than the opponent's, and every call of his earns money. The count is not the share of his range you beat but the share of hands that will pay: folded hands bring nothing, however many there are. The bet is profitable if, among the payers, the hands you beat outnumber the ones that beat you.

Hence the choice of size. A big bet filters out the weak hands, and only strong ones pay, which often beat you. A small bet is cheap for the opponent, and he pays with almost anything holding a pair. A thin value bet, where you are ahead by little, is made small on purpose: the aim is not to win more in one hand but to be positive over distance.

An example from session 9

T♣T♦, two pair on 3♠ 4♠ 8♠ 3♦ 7♦, $33 in the pot. I bet $6, 18% of the pot, deliberately small. The opponent adds $6 into $39 and needs to be right 13% of the time, and at that price he pays with anything holding a pair. Among the payers I beat 66 combinations against 28, two and a third to one; the bet earns $2.43 on average. He showed J♦J♥ and took the pot. The bet stayed positive across all sixteen sets of assumptions.

The same in business

A value bet is a price set by who will pay, not by who likes the product. A high price leaves only the customers who need the product so much that they have compared it with every competitor, and those are the worst customers to negotiate with. Sometimes a lower price earns more not because there are more buyers but because fewer of them beat you.

The whole hand is in session 9: “If you get to choose, be the marketplace, not one of its users”.

The other terms are in the glossary.