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profit margins
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Gamma Alpha RJ: Gammatron CO: Gammatron Post Rating: 0 + / - Total Posts: 104 Karma: 62 Joined: Apr 7, 2012 |
Posted on May 13, 2012 if i can sell on b2b market 1 unit of nylon for about 30x more than i invest in producing it (2$ - 60$), why should i produce, say, swimming suits with my own nylon, which will bring me just 10x more cash (cost of production of i unit of s.s. is about 30$ -> b2b price for them is about 300$)? it looks like there's no sense in transforming some goods into other products, because you just loose money that way. i just realized that it works this way in the textile world at least... the threads (wool, vinyl, etc) are the ultimate businessman dream, cause the profit margins are the largest here (from 2000 to 5000%)
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Josh Millard RJ: Tex Corman CO: J. Quaff Arabica Post Rating: 0 + / - Total Posts: 167 Karma: 231 Joined: Apr 3, 2012 |
Posted on May 13, 2012 The retail sales channel for most products is steadily profitable and servers a much larger (robotic) market than B2B. If you are making as much money as you want off B2B sales of nylon thread, that is awesome and go you. If you are sitting on a surplus of nylon thread, selling it at retail, or selling items made from it at retail, is a channel for further revenue. Depends entirely on what market you want to be in and whether that market is performing to your needs. |
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Josh Millard RJ: Tex Corman CO: J. Quaff Arabica Post Rating: 0 + / - Total Posts: 167 Karma: 231 Joined: Apr 3, 2012 |
Posted on May 13, 2012 (Put another way: the robocitizens of Econosia will never give up on swimming, so they'll always want swimsuits; at worst, the market will get saturated and the margins will drop a bit. But the human player buying your nylon thread may realize he's paying 30x markup on stuff he can make himself and stop purchasing your stuff overnight. Risk vs. reward! Diversification of sales channels is a good hedge against market surprises.)
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Dan Laurence RJ: Sourpuss CO: Sourpuss Post Rating: 0 + / - Total Posts: 49 Karma: 15 Joined: Mar 27, 2012 |
Posted on May 13, 2012 I think the main question is why are people buying your nylon thread for $60 when it's importable for $29. Also, scaling.
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Jim Eikner RJ: Jim Eikner Post Rating: 0 + / - Total Posts: 23 Karma: 21 Joined: Apr 12, 2012 |
Posted on May 13, 2012 Dan, perhaps they aren't paying attention. More importantly, why are they buying imports for $29 when they can manufacture it for $4?
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Gamma Alpha RJ: Gammatron CO: Gammatron Post Rating: 0 + / - Total Posts: 104 Karma: 62 Joined: Apr 7, 2012 |
Posted on May 14, 2012 Yeah, I completely forgot about import stores! I'm adjusting my prices accordingly then.Well, If I could produce everything myself, the B2B market would simply die out, because I'd fill my shelves with the goods - the profit margin is higher there. And the circulation of production process would make it possible to restock my stores with huge amount of goods as soon as they sell out. Still, I was addressing my remarks to the fact, that there's no sense to waste the nylon thread (and other products) to make another products, keeping in ming the necessary diversification of selles channels. |
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Brent Goode RJ: BB Goode CO: BB Goode Post Rating: 0 + / - Total Posts: 506 Karma: 180 Joined: Apr 5, 2012 |
Posted on May 14, 2012 Producing every bit of a industry need is also not necessarily the most profitable avenue. You have to balance production needs with available building slots. I may need more factories making final goods to keep my stores happy, and have to give up researching, resourcing and manufacturing the threads I use on four of the twelve I sell out of those factories. So I would buy from the import market when the B2B is over-priced per quality. (I still don't understand people trying to get the same price for Q 7.036 as for Q 33.852. Especially when the import price for Q 15 is 30% less.)
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David McDonough RJ: AutoMcBeeziness CO: AutoMcBeeziness Post Rating: 0 + / - Total Posts: 6 Karma: 11 Joined: Apr 23, 2012 |
Posted on May 16, 2012 because someone else will also want to sell nylon, and will do it for cheaper. The game just needs more people, more competition. The prices should sort themselves out.
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Gamma Alpha RJ: Gammatron CO: Gammatron Post Rating: 0 + / - Total Posts: 104 Karma: 62 Joined: Apr 7, 2012 |
Posted on May 17, 2012 I hope so, todays margins are like 1000%.
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