Satisfactory Margin and Value

“Value is when the outcome of a situation exceeds the cost incurred by a satisfactory margin.”

But what is a ” satisfactory margin”?

Margin is the difference between the amount of cost incurred and the benefit derived. Not all margins, however, are created equal. In order to experience value, the margin must also be satisfactory. For example, a manufacturer produces an item that costs him $10.00 and sells the same item for $12.00. So this item has a 20% margin (($12.00 – $10.00) / $10.00). This manufacturer may be very happy with this margin. But for another manufacturer, and for a variety of reasons, this margin may be woefully deficient.

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Raise Your Visibility & Value: What Is “Value”?

In order to have a conversation regarding raising your value in your organization, we need to have a common definition of value from which to work. In the Raise Your Visibility & Value model:

Value is when the outcome of a situation exceeds the cost incurred by a satisfactory margin.

While most of the words and phrases in this definition are self-explanatory, “outcome of a situation,” “cost,” and “satisfactory margin” require additional explanation.

First let’s address “outcome of a situation.”
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