Wealth of Nations: Book 1: Chapter 6: Of the component Parts of the Price of Commodities

What is profit? The core of this chapter is laying the framework for what become the terms for evaluating economic situations. All revenue basically falls into three categories. Rents are what's paid to a landlord for use of land or factory space, and later I'm sure that which is paid to lease equipment. Profits are what's made in regards to maintaining and supplementing a stock of finished goods. And wages are what's paid for a persons labor.

All revenue Smith says is either one of these three or derived from one of these. And they all can play a role in a products final cost. Imagine for a moment I lease land to grow organic tomatoes. I am however lazy so I'm going to employ you dear reader as my farmer. So I will pay rent to the owner of the land. I will pay you wages to till the land. And there are various costs in figuring out farming materials. But the final price of the tomatoes at the market factor all these things in. So if it takes us $1000 total to produce 1000 tomatoes, we would charge $1 per. That does include an expected rate of return. Namely by devoting my energies into managing this operation I'd expect let's say 10% of the total revenue (so $100).

This is really just common sense really. If you think about all the things that go into making almost anything you have, and trace back to its basic most materials, there exists a long train of people doing things to get materials for someone else to manufacture into parts for yet someone else to assemble into your thing. And all those wages divided up, rents people paid, managers looking for some small measure of profit. Welcome to the supply chain baby!