Cost versus Price versus Value versus Profit

People are way too confused about the differences between cost, price, and value. Cost is how much money it takes a business to make a product or perform some service. It represents the combined expenses of labor, materials, and talent as well as the prorated expense of overhead and access to capital. Price is how much money the producer or service provider wants from the customer in exchange for their product or service. The difference between cost and price is profit. Value is the benefit customers perceive they will get from their transactions. Cost, price, value, and profit combine in 16 different ways depending whether each is either too high or too low.