The Difference Between Profit and Value

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When we live in a world that’s driven by money, businesses tend to make decisions that generate the most profit, rather than create the most value for people.

For example, milk chocolate companies spend millions on advertising and getting people to eat their chocolates, even though their products are filled with sugar at the end of the day. Selling candy bars is great for profit because sugar is addictive, but they are ultimately detrimental to our health, with high sugar intake being linked to elevated heart disease and stroke.^[1]

Soda companies sell soda drinks which contribute to tooth decay and diabetes These drinks are highly profitable since, again, sugar is addictive, but they don’t add to our health — they take away from it.

Fast-fashion companies create huge waste as they produce new clothes every season and market them as the latest fashion (how many clothes does one need, realistically?).^[2] Telling people to buy more and more clothes is definitely more profitable than telling them that they are beautiful as themselves, which doesn’t generate the same intensity of repeat sales.

Likewise, online, social media sites like Facebook design their platforms with dark patterns to build addiction at the expense of the user’s productivity and well-being.^[3][4][5] With video streaming, Netflix CEO Reed Hastings said before that sleep — a basic human need — is their competition:

“You get a show or a movie you’re really dying to watch and you end up staying up late at night, so we actually compete with sleep. And we’re winning!” — Netflix CEO, Reed Hastings^[6]

Yet there’s a difference between earning profit as a result of adding value to the customer’s life, and earning profit at the expense of your customers.

• Earning profit at the expense of your customers = Selling junk food and damaging your customers’ health
• Earning profit as a result of adding real value = Selling nutritious food that adds to your customers’ health
• Earning profit at the expense of your customers = Social media sites using hacks and addictive design elements to keep users on their sites longer, causing user fatigue
• Earning profit as a result of adding real value = Improving users’ lives through meaningful content

Some questions to think about as a business owner:

• Do you focus on your customers as the priority in your business?
• Is your product or service something the world really needs? Or is it a nice-to-have?
• Does your product or service add value to your customer’s life? Does it improve their health/ relationships/ career/ well-being/ <insert life area>?
• Does your product or service subtract from your customer’s life? When they use it, does it worsen their health, relationships, well-being, or other areas of their life?

A profits-at-all-costs approach may seem logical as the ultimate goal of a business is to, well, earn a profit.

But businesses that generate profits at all costs, at the expense of the user’s well-being, will eventually drive away their users. That’s because the users will realize that the business is not good for them, and its products and services don’t really serve them.

On the other hand, there is the value-centered approach where you think about your business with your users in mind first. What do they need? What betters their lives? Is this really the right thing for them? You focus on (1) creating value for your customers and (2) earning profit from the quality products you create, while preserving the integrity of your business. Not earning profits at all costs, not pushing for sales at the expense of your customers, and certainly not creating products that have a negative value for them. Profit comes as a result of creating high-value products that genuinely improve your customers’ lives — be it happiness, health, productivity, career, or relationships.

A value-centered approach is a win-win for everyone: you and your customers. It may look like a lose-win initially (lose for you), but it’s not. When you have your customers’ needs in mind, they know you care about them. They stick with you and your business because they know your products work and benefit them.

A profit-at-all-costs approach is a lose-lose. While it may start off as a win for you, it’s a lose for your customers and eventually becomes a lose-lose as customers boycott businesses that do not have their best interests at heart.

Here are some examples of how to really create value for customers:

• Instead of selling yet another unhealthy dessert, sell food that’s nutritious and wholesome, and that customers want to eat.
• Instead of getting customers to buy things to feel good about themselves, help them recognize the beauty that’s already in them.
• Instead of finding ways to make your readers stay on your site for an unnaturally long time, think about how you can positively change their lives, and let them decide the optimal time to stay on your site.

When we start focusing on people as people rather than serving our self-interests (or investors’ or shareholders’ interest), that’s when we truly benefit society as a whole. We start to truly better people’s lives and raise their consciousnesses, and attract a loyal following and earn a profit as a natural result. That’s when we truly create an impact in the world.