Exploiting Differences in Pricing

by mark.shead on December 14, 2006

The basic way that businesses make money is by taking advantage of differences in prices. For example, Wal-Mart makes money by exploiting the difference between the price the can negotiate with suppliers and their selling price of an item.

Import businesses exploit the differences between what an item costs in a foreign country and what it costs locally. Restaurants exploit the difference between the cost of raw ingredients plus labor and the amount people are willing to pay for a meal.

When you start to think of businesses as simply exploiting price differences, you will start to see opportunities in new areas. Instead of looking for a traditional business, you can look for the underlying concept behind business. This type of mindset helps keep you from getting stuck in a rut and helps you redefine the idea of business based on how they make a profit.

If you can identify areas where your cost of obtaining a product or service is less than the price most people are willing to pay for that product or service, you’ve identified a potential business idea.

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