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Creating value, delivering it and capturing it as money are three different jobs, counted three different ways — and the effort they cost is not any of them.
Paper packet. Every task here also exists on screen, where it is checked automatically; answers written on paper are not assessed by Nydus. When you are back at a device, enter your answers there.
You will take anything a business does — a thing made, an arrangement kept, a payment taken, a hard week — and say whether it creates value, delivers it, captures it as money, or is none of the three. You will count what was made, delivered and paid separately, work out what was captured and what is still outstanding, and say which of the three a struggling business is failing at.
No new arithmetic here. What this lesson needs is one business you can picture in detail — yours, or one you have worked in, or one of the five this course keeps returning to — because every question in it is asked of a particular business on a particular day. You can already count and multiply; the skill here is knowing which count to make.
| Term | What it means |
|---|---|
| Value | Somebody being better off than they were. |
| Creating value | Making something that leaves somebody better off: a mug, a clean house, a working phone. |
| Delivering value | Getting it to the person who wants it: a stall, a booked slot, a delivery run. |
| Capturing value | The part of the value that comes back to the business as money. |
| Work in hand | Work started or finished but not yet paid for. |
| Outstanding | Delivered and invoiced, not yet paid. |
| Input | What the work used up — materials, hours, fuel — which is a cost, not income. |
A business creates something somebody is better off having, delivers it to them, and captures some of that value as money. Three separate jobs, each of which can be done well while another is not done at all.
Drop the third and you have a hobby: real value, really delivered, nothing coming back.
Separating them matters because from inside the symptoms look identical. A line and an empty register, a full schedule and a line of credit, long days and nothing to show — each has a different thing wrong with it.
And the trap everything later in this course rests on: effort is not value captured. The hours at the wheel are what the value cost to make, not what anybody paid for it.
Another way: steps
For anything a business does, in this order:
Another way: table
Five trades, three columns.
| Business | Creates | Delivers | Captures |
|---|---|---|---|
| Maya's Ceramics | a good mug | a Saturday stall | the price paid |
| Monica's Market Stall | fruit nearby | a corner pitch | the buying gap |
| Bright Home Cleaning | an evening back | a booked slot | a fee per clean |
| Neighborhood Kitchen | a fast lunch | a lunchtime counter | the box price |
| Northside Repairs | a working phone | a bench and an hour | a price per job |
The middle column is the one owners forget they pay for.
Name the business and the day. Every classification here is about a particular thing that happened: on Saturday, eleven mugs were paid for at the stall. General statements such as we provide quality are not any of the three; they are claims.
Ask who is better off. If a customer can now do something they could not — drink from a mug, go to work with a working phone, come home to a clean house — value was created. It was created even if nobody has paid, and even if the customer has not yet received it.
Ask whether it reached them. A mug on Maya's shelf is created and not delivered. Delivery is the stall, the gift shop, the courier, the booked hour. It costs money and time, and it is the job most often left out of a price.
Ask whether money came back. Only money that has arrived — cash in the tin, a card payment, a transfer — is captured. An invoice sent is not yet captured; a promise to pay is not captured; a line is not captured.
Count each separately. Made, delivered, paid: three counts, usually three different numbers. The check is that each count is no larger than the one before it — you cannot deliver more than you made, or be paid for more than you delivered, except for deposits paid in advance, which are money captured for value not yet delivered and should be written down as exactly that.
Value is judged by the person paying, not by the person who made it. What an owner is proudest of and what a customer is buying are usually two different things, and the only way to tell them apart is to watch what people actually do: what they ask about first, what makes them leave, what they come back for.
Which is why what feels like success stays separate from the money. A line that buys nothing, praise, a shelf of phones waiting: each is evidence, and none of it has reached the account.
It also explains why two businesses selling the same thing can capture very different amounts. A café by a busy station and one on a quiet street may make identical coffee. The station café's customers value speed and being on the way; the quiet café's value the seat and the calm. Each captures what its own customers will pay for what they value, and neither price is the true value of the coffee.
When a business is in trouble, the three jobs point to three different fixes, and working harder at the wrong one makes things worse.
| Symptom | The job that is failing | The kind of fix |
|---|---|---|
| People admire the product and do not buy it | creating value for a customer who pays | change the offer or the customer |
| People want it and cannot get it easily | delivering | change where, when or how it is sold |
| People buy it and the business is still short | capturing | change the price, the terms or the costs |
| Everyone is exhausted and nothing changes | none — effort has replaced all three | stop and diagnose |
A repairer whose shelf is full of unpaid phones has a capture problem, and more advertising will only fill the shelf. A potter whose mugs sell out at every market but who can only attend one market a month has a delivery problem, and a lower price will make it worse. Naming the failing job is the first step of every repair, and the rest of this course gives each job its own tools.
Owners often talk as if their trade decides how much they keep: cleaners earn this, potters earn that. In fact capture is shaped by a handful of choices every business makes, whether it notices or not.
What is charged for. A cleaner can charge per clean, per hour or per month; a courier per run or for being available. Each captures a different share of the same work. When money is asked for. Payment before, at, or after delivery changes how much is captured and how much waits as outstanding — and some outstanding money never arrives. Who is sold to. The same mug sold at a market, through a gift shop or to a café captures three different amounts. What is included. A repair priced with a three-month guarantee captures more than the same repair without one, because the guarantee is something customers value.
None of these changes the value created. All of them change the part that comes back. That is why the pricing and selling lessons in this course are about more than the number on the tag: they are about the terms on which value is captured, and every one of those terms is a decision the owner can revisit.
A piano teacher has 18 pupils for a ten-week term at 30 dollars a lesson. Every week she creates value — a child who can play a scale she could not play last month — and delivers it in a half-hour at the family's home or her own. The term's value delivered, at her price, is 18 × 10 × 30 = 5,400 dollars.
What she captures depends on her terms. When she let families pay lesson by lesson, about one lesson in ten was canceled at short notice and not paid for, and a few families paid late or not at all: last term she captured about 4,600, having delivered 5,000 of lessons and kept 600 of slots free for pupils who did not come. Her hours, her travel and her preparation were the same either way.
This term she asks for the term's fees at the start, with one make-up lesson allowed. Nothing about her teaching changed: the value created and delivered is the same. What changed is capture — she now receives 5,400 in the first two weeks, before a single lesson is missed. Seeing the three jobs apart is what showed her that her problem was never the teaching.
Many widely used programs are written by volunteers and given away. They create enormous value — much of the internet runs on them — and deliver it for free to anyone who downloads them, while capturing almost none of it. Companies built around such software capture value in other ways: paid support, hosting, or extra features. The three jobs are visible precisely because the third is so often missing.
Effort read as income. The costly one. Hours are what value cost you, not what anybody paid for it.
Busy read as working. Bright Home Cleaning can be booked solid at a price that does not cover the driving.
Value judged by the maker. What the owner is proudest of and what the customer is buying are usually different, and only one can be charged for.
Capture treated as a fixed share. How much you keep is decided by what you charge and who you sell to, not handed to you by your trade.
An invoice read as money. Work invoiced and unpaid is delivered, not captured.
Delivery treated as free. It rarely looks like work, so it rarely gets costed — and a price built from materials alone loses money on every sale that travels.
Count what the kiln produced.
$\text{made} = 40 \text{ mugs}$
Value created, whether or not one is sold.
Count what went out to customers' reach.
$9 \text{ on the stall} + 6 \text{ to the gift shop} = 15$
Delivered, and the day it took is a cost of delivering.
Count what was paid for at the table.
$\text{paid} = 11$
Only these are captured today.
Find the money captured at 18 a mug.
$11 \times 18 = 198$
The number the bank will see.
Check the three counts shrink in order.
$40 \ge 15 \ge 11$
Created, delivered and captured are different counts.
Count the phones that came in.
$\text{in} = 22$
Each is a customer who would otherwise buy a new phone.
Count the phones handed back and paid for.
$\text{paid} = 19$
Delivered and captured together, the tidy case.
Find the money captured at 55 a repair.
$19 \times 55 = 1045$
Captured this week.
Count the phones on the shelf waiting for a part.
$22 - 19 = 3$
Work in hand, not income.
Find what the shelf has cost so far in parts at 12 each.
$3 \times 12 = 36$
The shelf looks like a good week; it has already cost money.
Say which number the bank sees.
$1045$
Nineteen paid jobs, not twenty-two.
Count the cleans done this month.
$\text{done} = 24$
Value created and delivered at 24 addresses.
Count the cleans paid for by the last day.
$\text{paid} = 20$
Four invoices are still outstanding.
Find the money captured for this month's work at 50 a clean.
$20 \times 50 = 1000$
Captured for work delivered.
Find the value delivered but not captured.
$4 \times 50 = 200$
Outstanding, not income yet.
Add the deposits taken for three deep cleans next month at 30 each.
$3 \times 30 = 90$
Money captured for value not yet delivered.
Total the money that arrived this month.
$1000 + 90 = 1090$
The bank sees this.
Label each figure.
$1000 \text{ earned}, \ 200 \text{ owed to her}, \ 90 \text{ owed by her in work}$
Deposits are a promise of work; counting them as earned would overstate the month.
A hundred and twenty boxes are made. Say what that is.
$\text{made} = 120 \Rightarrow \text{created}$
Value exists before anyone buys.
105 are sold and paid for at 8. Find the money captured.
$105 \times 8 = 840$
Only paid boxes are captured.
The counter sells out by half past one on a busier day. Say what that is.
A barber and a bakery. Sort each sentence by which of the three things the business is doing — or by its being none of them.
| Creating value — somebody is better off | Delivering it — the thing reaches the person who wants it | Capturing it as money — some of the value comes back to the business | None of the three — it is effort, or praise, or a promise | |
|---|---|---|---|---|
| The boy leaves the barber's chair with a haircut he will not be sent home about | ||||
| The bakery opens at six so the early shift can buy bread on the way in | ||||
| Eleven dollars goes into the barber's register before the next customer sits down | ||||
| The baker has been on her feet since four in the morning |
Complete the worked solution: a potter makes $49$ mugs in a week. $13$ are sold and paid for at $23$ dollars each, and $5$ more are delivered to a gift shop that will pay at the end of the month. How much value has been captured, and how much delivered but not yet captured?
Count the mugs still with the potter.
$49 - 13 - 5 =$ k
Made but not delivered: value created that has not reached anyone.
Find the money captured.
$13 \times 23 =$ c
Only paid sales are captured.
Find the value delivered but not captured.
$5 \times 23 =$ d
Handed over, not yet paid for.
Add the two for everything delivered.
$(\text{captured}) + (\text{outstanding}) = 414$
Delivery and capture are different counts.
Say which number the bank sees.
$\text{the bank sees } (\text{captured}) \text{ only}$
Work done and money received are not the same thing.
Northside Repairs took in $21$ phones this week. $19$ were repaired and handed back over the bench, paid for at $48$ dollars each before they left. $2$ are on the shelf waiting for a part. How many dollars of value did the shop capture this week?
Answer:
At Bright Home Cleaning, which of these is the business **capturing** value?
Bright Home Cleaning did $25$ cleans last month at $58$ dollars each. By the last day, $3$ of the invoices had still not been paid. How many dollars of work has she delivered but not yet captured?
Answer:
Four things that are true of Maya's Ceramics. For each one, say whether the business is creating value, delivering it, capturing it as money, or doing none of the three.
| Which is this? | |
|---|---|
| the hours at the wheel, which are what the work felt like | |
| the price of the mug, paid at the moment it leaves the table | |
| a mug somebody is glad to drink from every morning | |
| a market stall on Saturdays and a shelf in one gift shop |
A bicycle courier carries documents for law firms. This month she made $34$ runs at $14$ dollars each, and on $3$ afternoons a firm paid $28$ dollars to have her held ready whether or not it sent anything. Every firm has paid. How many dollars did the business capture this month?
| Amount | |
|---|---|
| Captured from the runs, dollars | |
| Captured from the standby afternoons, dollars | |
| Captured this month, dollars |
Lesson test: one question per skill, one attempt each, no hints. Your answers are checked when you submit.
Four things that are true of Bright Home Cleaning. For each one, say whether the business is creating value, delivering it, capturing it as money, or doing none of the three.
| Which is this? | |
|---|---|
| the customer saying it was the best clean she has ever had | |
| a fee per clean, invoiced at the end of the week | |
| an evening back, in a house somebody does not have to clean | |
| a booked slot, a key arrangement and somebody who turns up |
You can sort what a business does into creating, delivering, capturing and none of the three, and count the money captured and the work still outstanding. Tell someone why a week of long days is not income, and why value is judged by the person paying rather than by the person who made it. Next: the three different questions money answers — revenue, profit and cash.
15. Your turn: a lunchtime at Neighborhood Kitchen, step 3
$\text{selling out} \Rightarrow \text{none of the three}$
It is evidence that the price may be low or the batch small.