We would like to propose the contraction pr'it as an acceptable substitute for profit so as to represent it with a four-letter word in keeping with the sympathies of the times. Although we have common cause with those who object to profits obtained through fraud, deceit, or guile, we are not ready to throw the baby out with the bathwater. The basis of a free market economy is the ability to earn a profit by creating value, i.e. using effort and ingenuity to create outputs of greater worth than inputs. Customers are the arbiters of that value and they vote with their wallets.
If we may rely on the simple value equation of value equals perceived quality divided by cost, it is clear that customers vote with their wallets based on receiving similar quality at a lower cost or higher quality for a similar cost or much higher quality at a cost that seems worth it. Therefore our work needs to be directed at creating efficiencies that lead to lower cost without degrading quality or at creating better products/services whose perceived value justifies paying more.
It is a strategic imperative to choose one way or the other. Although a low-cost producer must deliver acceptable quality, and a high-quality producer must be efficient enough to remain affordable, the basis for distinction requires a tenacious focus. You can have distinctive low pricing with acceptable quality, or you can have distinctive perceived quality at an acceptable cost, but if you aim for distinctive low pricing with distinctive high quality, you will more likely end up with mediocrity across the board.
Understanding the customer experience helps to shape a winning value proposition. If the goal is to compete on cost, that does not necessarily mean a sole focus on purchase price. The total cost of ownership might include consideration of reliability, durability, ease of use, and ease of maintenance. Most people have probably learned, as we did from our mothers, that "we can't afford to buy cheap goods". If the goal is to compete on quality, the options run the gamut from being easier to do business with, delivering results faster, providing higher levels of technical quality, providing higher levels of service quality, or simply creating more innovatively helpful solutions.
The customer is not always right; very often the customer is ignorant or confused. A major component of earning a profit is investing in understanding customers' needs. Great companies know their customers' needs better than their customers do, and they seek to provide goods and services that effectively address those genuine needs. This is the polar opposite of pressure selling goods and services that are not needed. Resolving real needs is the basis for legitimate earning of profits.
