Economic logiceconomic logicThe facet of the strategy diamond that refers to how a firm will earn a profit; that is, how a firm will generate positive returns over and above its cost of capital. refers to how the firm will earn a profit - that is, how the firm will generate positive returns over and above its cost of capital. Economic logic is the “fulcrum” for profit creation. Earning normal profits, of course, requires a firm to meet all fixed, variable, and financing costs. Achieving desired returns over the firm's cost of capital is a tall order for any organization. In analyzing a firm's economic logic, think of both costs and revenues. Sometimes economic logic resides primarily on the cost side of the equation. Irish airline Ryanair, for example, can fly passengers for significantly lower costs per passenger mile than any major competitor. At other times, economic logic may rest on the firm's ability to increase the customer's willingness to pay premium prices for products (in other words, prices that significantly exceed the costs of providing enhanced products).