Profit Equation


Ok so Critical has already introduced the Business Team. Now it's time to link it to Profits. The above is a simple equation but it is very insightful for understanding how to compete in a ultra competitive market.


Lets change one variable at a time:
1. Increase Sales and no change to Craft and Buy costs, Profit goes up.
2. Decrease Craft cost, Profit will go up too.
3. Decrease Buy costs, Profits will also go up.

Wusses run away from 1g profit margins. Market Leaders look at at that equation and when faced with low Sell prices, understand: to make this work I need to decrease my Craft cost or my Buy cost. Then they start figuring out ways to reduce Craft costs and decrease Buy costs.

The Market Leader is the leader because his Craft and Buy costs are lower than yours and can make stuff cheaper than you.