Notes

Competitive advantage is your value-cost gap

🌿 Revisited May 5, 2025 at 9:18 AM Created May 5, 2025 at 9:12 AM 1 min read

Your competitive advantage is most easily quantified as the gap between the perceived value of your products (i.e., your pricing power) or services and the cost you incur to deliver those services.

As a result, deepening your competitive advantage–which is the result of good strategic thinking—always manifests in higher value or lower cost.

Note that this is slightly different from, although strictly correlated to, your profit margin: just because you can charge X does not mean you have to charge X. You can also use your competitive advantage to charge below your pricing power and deepen your market penetration.

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