One Simple Trick to Earn More Money: Profit Centers vs Cost Centers

One Simple Trick to Earn More Money: Profit Centers vs Cost Centers

how to make your money in your careerMoney is one of the top considerations when making career decisions throughout your life. But are some areas of a company likely to pay far more than others?

The answer is yes, and the areas we want to look for are called Profit Centers.

Determining the difference between Cost Centers and Profit Centers, and then aligning your career into the more lucrative area is an easy way to optimize your earnings and make much more money throughout your lifetime.

What are Profit Centers and Cost Centers?

Any business has areas that generate revenue/profit. Most businesses have one primary area, but some have many. Profit Centers are areas within the business directly related to this profit-generating function. If your goal is making more money, Profit Centers are where you want to be within a company.

Cost Centers are the opposite- rather than contributing to revenue, they cost the business money and reduce total profits.

Even once you narrow down your career choices to avoid Cost Centers, there are a lot of options and choices. Keep reading for some examples/ideas…

Here’s an example of Profit Centers vs. Cost Centers:

If a business is selling antivirus software, some of the Profit Centers would be:

  • Research and Development teams
  • Programmers that create the product
  • Product testing
  • Customer Support/Account Management after the product launches
  • Sales teams that find new customers and sell the product

And some of the Cost Centers would be:

  • Accounting
  • Human Resources
  • Corporate Training
  • Administrators or Secretaries
  • Social Media Managers, Public Relations Managers, etc.

 

Why do people in Profit Centers make more money?

Their work directly helps the company generate income. It only makes sense that the company pays them more.

If a sales person exceeds their goals, those additional sales go directly into the company’s profit.

If somebody in HR does an outstanding job and hires two extra people, those people still need to produce results that help the company’s revenue totals. This is very indirect and is the reason that somebody in HR is unlikely to earn more than somebody in sales.

There are a few exceptions- A corporate lawyer will be extremely high-paid, and is still a Cost Center within most business models.

But the advice in this article holds true for most positions, especially those that don’t require a specific advanced degree (the corporate lawyer is being paid for their law degree and expertise within one area).

Making More Money is Simple:

Make sure you’re in a Profit Center within your company, and stay there. Period.

If you can’t fit within any Profit Centers in your current company, find a new company or industry.

Let’s say you’re doing Accounting work for a beverage company. That’s clearly a Cost Center. But if you find a job at an Accounting firm, they are billing their clients for your time and effort, which makes you a part of their Profit Center.

Any extra time that you put in or extra results that you produce will directly impact your company’s revenues and you’ll usually make more money.

 

 

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