July 30, 2019

What is mutual profit?

When a client is giving you money to do something for them, it can feel like you are the only one profiting. I mean, you’re the one receiving the money and they’re the one paying the invoice, so... you’re the only one profiting, right?

No, not necessarily. “I made more money than I spent” is only one way to measure profit - and a fairly crude one at that.

Lemme deconstruct it a bit with an example...

If you bet $100 bucks at the track and won $1000, then your profit is $900 right? Well, maybe. But what about the time you spent standing there all day? And what about the gas you used to get there in the first place? And what about the drinks you bought because it was sweltering hot? And what about the discomfort you experienced when that guy stomped on your big toe?

These are all types of cost.

And while we’re at it, didn’t you get more than just the $1000 from your day at the track? Weren’t you entertained by the people watching? Weren’t you excited every time the horses bolted out of the starting gate? Weren’t you elated when you won the big prize?

These are all types of value.

In most cases, profit is not just about dollars and cents. The more you think about it, the squishier it gets. The ultimate litmus test for whether an exchange was profitable is for both parties to ask themselves:

“Am I happier now?”

If both parties answer “Yes!” - no matter what basis they use to calculate their answer - then there has been a mutually profitable exchange.

You see this all the time at small family owned and operated business like coffeeshops or knitting stores or hair salons. When the customer pays the clerk, and both parties say “Thank you!” It’s because they are both happier now. They both profited.

This is the kind of exchange you want. It creates a virtuous cycle. To get there, it helps to first find out what will make the client happy.