Monday, June 17, 2013

The value of profit

In the world of business, nothing is more important than profit.

If a company isn't profitable it won't be around very long.

So it's not surprising that companies work hard to manage their bottom lines, leverage resources and look for opportunities to make their businesses more efficient.

It's a pretty simple equation: value – cost = profit

The problems arise when companies believe that the only way to increase profitability is by managing the second half of the operation.

You can cut costs all you want, long-term profitability, however, is the result of building value. 

Here's why:

Someone will always make it cheaper. Someone will always offer a lower rate. Someone will always be willing to shave a few points off the margin.

Companies that last focus on profitability through value. They deliver what's important to the customer in a way that's remarkable. They invest in their systems, their people, their research and development, their infrastructure, their communities, their brands.

They know the cheapest way isn't always the best way.

Because while you can always cut your way to a quarterly profit, you can't cut your way to greatness.


  1. Great post! I've had this on my mind a lot lately in pricing my own services for clients.

    1. Thanks Derek, I really appreciate it. I hope this helps you with your challenges.