To understand how businesses truly function, remove manufacturing as a factor.
Production costs vary across industries and create distortion in financial structures.
A software business can operate with close to zero cost per unit.
A hardware or luxury business might require significant capital to produce or procure inventory.
That difference skews how we read their financial statements.
So to see clearly, normalize that layer.
Treat revenue as the base for businesses with negligible cost of goods.
Treat gross profit as the base for companies where COGS is significant.
This normalized base is the value available after product creation is handled.
It is the portion of money the business actually controls.
It is the fuel for everything that comes next.
Let’s call this number product income.
Once you analyze different companies through the lens of product income, one pattern becomes clear.
Marketing takes the largest share.
Over and over again, across different types of businesses, product income flows heavily into marketing.
This includes software companies, hybrid platforms, luxury houses, and even technical monopolies.
The numbers are consistent.
Salesforce spends over 60% of its product income on marketing.
Airbnb spends 30 to 40%, while also allocating a similar amount to product development due to their infrastructure-heavy model.
Apple and Google, companies with massive global infrastructure, still spend approximately 20% of product income on marketing.
This number does not disappear at scale.
It holds.
It becomes part of the base structure.
LVMH gives another clear case.
Their revenue is €84,683,000.
Their gross profit is €56,765,000.
Their marketing and selling expense is €31,002,000.
That is over 55% of product income directed toward keeping their offer in circulation.
These are not temporary campaigns.
These are structural expenses.
Marketing is not a promotional layer on top.
It is the delivery engine that ensures product income continues to exist.
Even ASML, the only producer of extreme ultraviolet lithography machines, reports 7% of product income going into marketing.
Very few units are sold and their machines are sold at very high prices.
Their customers cannot buy them anywhere else.
Still, that 7% spend exists.
Because customers still need attention, education, relationships, support, and alignment.
Monopoly does not eliminate the need for market movement.
Even when you have no competitors, you still need to stay present.
Marketing is not a one-time spend.
It is a continuous loop.
It is the system that allows product income to turn into future product income.
That loop costs money.
That cost shows up as a percentage of whatever remains after product creation.
This is true whether the business is funded or bootstrapped, whether it is early or scaled, whether it has traction or not.
Marketing remains the largest operating requirement once product creation is handled.
This is why product income is often the right reference point.
It allows clear comparison between software and hardware, between pure-play brands and logistics-heavy models.
It allows affiliate operators, white-labellers, and commission-based resellers to look at their operations the same way.
It creates a single metric for judgment.
For people who haven’t yet chosen an industry, product income gives a grounded starting point.
It allows you to evaluate your business idea with clarity.
How much money will remain once you’ve built or sourced your product?
And how much of that must go into visibility?
The answer is almost always—most of it.
Whether you are running a SaaS platform or a high-end retail line, marketing eats the majority of product income.
In many cases, especially during early growth, it even exceeds it.
You may spend more than you earn simply to gain relevance.
This is not a flaw in the system.
It is the system.
Business is not just product development.
It is distribution, positioning, attention, and repeated delivery of the offer.
All of that costs money.
And that money comes from the only pool that matters—the product income.
Every business needs to continuously enter the mind of the customer.
Every business needs to fund that entry.
This remains true at every level of scale.
Early-stage businesses may spend more than 100% of their product income to become visible.
Later-stage businesses may stabilize between 20 to 60 percent, but the cost remains ongoing.
The mechanism never turns off.
To say that marketing is infrastructure is not a metaphor.
It is literal.
It is the financial structure that carries product income forward.
It converts potential into awareness, and awareness into transactions.
It keeps the cycle alive.
When planning a business, this must be accounted for on day zero.
It cannot be skipped or replaced.
You will need to allocate 50% or more of your product income to marketing, or the system will not move.
Once you remove the manufacturing layer, every business is simply product income & marketing.
Product income is what you have.
Marketing is what you spend to keep it flowing.
Every business runs on two types of pressure.
One comes from the people who give you capital.
The other comes from the market you want to serve.
Capital has expectations.
So does the market.
To meet the expectations of capital, your business must generate a certain minimum return.
This return is not flexible. It is structural.
In finance, that return is tracked through a number called WACC (the weighted average cost of capital)
It shows how much return your business must create to keep capital committed.
If you drop below that number, the investor’s money leaves.
That number does not care how good your product is.
It only cares whether the return matches the risk.
But money is not the only thing your business depends on.
Your business also needs attention, reach, and demand.
That demand does not stay alive on its own.
It needs constant reinforcement.
That reinforcement has a cost.
It shows up as marketing, distribution, sales, partnerships, and every effort made to keep the business visible.
This is the attention system.
It is just as real as your funding system.
It also has a minimum cost.
That cost is what I term now as CARO (Cost of Attention Required to Operate)
CARO is the baseline amount your business must spend to stay alive in the market’s awareness.
It is what you spend so your offer continues to exist in the minds of customers.
It is the cost of not disappearing.
If WACC keeps the capital system alive, CARO keeps the demand system alive.
Both costs are permanent.
Both costs are enforced by the system itself.
If either cost is not met, the flow stops.
Your team might keep working.
Your product might still function.
But circulation breaks.
This is why marketing is not a phase or a tactic.
It is a structural expense that must be built into the core of the business model.
We live in an era where the cost of making something is often equal to or lower than the cost of distributing it.
Many tech companies are spending on marketing in a year what they would on development of product over 4-5 years.
In this environment, marketing is not a booster. It is the main engine.
And just like your product must be funded, your visibility must be funded too.
So when thinking about what a business truly costs, you must go beyond salaries, tools, and product development.
You must include the cost of staying capitalized.
You must include the cost of staying relevant.
That’s why the Cost of Business is not just one number.
It is the sum of your WACC and your CARO.
WACC is the cost of keeping your capital.
CARO is the cost of keeping your circulation.
One powers your internal engine.
One powers your external engine.
Ignore either, and the machine stops running.
Your real margin only begins after both are paid.
Be stingy about CARO today and see your product income affected later.
That is what defines a stable model.
That is what keeps a business in motion.
It is not about launch.
It is about staying.
And to stay, you must pay two prices:
The cost of capital.
And the cost of attention.
That is the full cost of business.