The road to profit

Coca Cola makes a tiny profit on each bottle they sell. However they sell billions of bottles of different drinks across the world. In other words Coca Cola is in the volume business. Their business model relies on scale and volume. 

On the other hand Mercedes Benz sells a few cars but makes a very high profit margin for each sale. They are in the margin business. This model usually applies to luxurious goods and complex goods/services. For example a software company will charge an arm and a leg to build a customized solution for your organization.

It is possible to combine volume and margin to make incredible profits. That is what Apple computers has been able to do. The iPhone is relatively expensive and yet millions are sold globally. This makes Apple one of the most valuable companies in the world.

On the road to profit, it is advisable to have clarity on whether you are going after volume or margin. Doing both is optimal, but it rarely works out.

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