December 21, 2021
You don’t sell a commodity, so don’t act like you do
Believing that cost determines price is common.
It’s also completely wrong.
In a commodity market, like zinc, cost and price can seem to be tightly correlated.
Buyers don’t care who they buy zinc from. The zinc is all the same to them, so the sellers constantly undercut each other on price.
Eventually, an equilibrium is reached where the price is just a teeny bit higher than the cost.
In other words, the buyers pay slightly more to the sellers than the sellers have to pay to produce the commodity.
That’s the race to zero.
Here’s the thing…
You don’t sell zinc.
You don’t have to race to zero.
All you have to do is be meaningfully different to your ideal buyers.
If you can do that, they’ll pay a premium.
So…
Figure out how you are different, and lean into it hard.
That’s how you race to the top.
Yours,
—J