Eli5- How do they make profit on bottled water

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Hello,

We have bought a pack of bottled water at Costco, it is 35 bottle of 500ml, the entire pack was 2.75 Canadian Dollars.
How do they make profit on this, it’s about 8 cents per bottle, that would include, the water, bottle, and printed paper on bottle.
How do they make it work ?

Thank you

Update: I did some Googling, it’s indeed spring water, and not tap water. Check here: https://www.cbc.ca/amp/1.3825916

In: 1

Costco prices are subsidized by your membership costs.

Otherwise, the general rule is to make it cost less to produce than they are selling it for.

You go there to buy the cheap water and while you are there, you stock up on toilet paper and cheese curds.

A customer in the store is the goal))

It very well could be a “loss leader” which is a product they sell so cheap they are willing to take a loss on the product in order to get people in the store. Because most stores know once you are in the store you are going to buy more than a case of water.

Bottled water is the biggest scam in the drinks industry.

Generally speaking you are basically drinking a bottle of Coke, at the same price, with none of the things in it that make it Coke.

Even the cheaper bottled water is profitable because the water itself is basically free. A lot of bottled water is actually just tap water (read the label) or from a common drinking source rather than some idealistic spring you might be imagining.

So they take something that’s basically free, put it in a bottle, do absolutely nothing to it, ship it, and charge you a huge mark up on it.

Discount water like at Costco take advantage of their economical shipping practices (they ship huge volumes of product) to keep the costs down. They might only make 50 cents on the same of the case but they don’t care. Costco has a lot of loss leader items that make no profits but the goal is to get you into the store to buy other things.

The bottle costs about 2 cents, the water costs too little to measure. There is plenty of profit, but that explains why they need you to buy them 35 at a case.

Costco’s profit is basically their membership fees. The cost of goods in the store are their cost, plus the overhead costs like labor, electricity, shrinkage, etc.

I think $0 .08 is fair. They are probably making 2-4 cents per bottle. Now go to a game, even local high school, and pay upwards from $2, and you’re in scam territory.