Business Thinking for Designers

• Competitive advantage – A condition or circumstance 
that puts an organization in a superior business position 
relative to competitors. For example, Apple uses design as 
a competitive advantage. Geico uses low prices.

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31 
Explore business concepts
• Profit – The difference between the cost of making or 
buying something, and the price at which it’s sold.
• Profit margin – The amount of profit a company keeps 
relative to the sale price. Typically referred to as high or 
low, companies use profit margin to determine whether 
they need to sell a lot or a little of something to achieve 
income targets. Apple earns high profit margins on their 
iPhones, so they don’t have to sell a lot of them to make 
money. The fact that they do sell a lot is a major reason 
why they have over $200 billion in cash. Geico has low 
profit margins on their policies. So they have to sell a lot of 
policies to make a meaningful amount of profit. 
• Trade-offs – Decisions companies make to reduce 
something in return for increasing something else. A 
common trade-off is the good-fast-cheap scenario, in 
which you can only have two of the three characteristics. 
For example, you must choose between quality (good) and 
speed (fast).