If merchants only get a small amount from what they sell, then how do they make profit if one or more of their product isn’t sold ?

Question

Let’s take a phone merchand for example. Let’s say that he sells the phones for 500$, but his income from a phone is 50$ because they are sold 450$ from the factory. So, if just ONE phone isn’t sold, he’d lose 450$, and he’d need to sell 9 phones (450÷5) just to come back to the starting point.

This question also works for any kind of merchandizing, including food (which becomes unsellable after a few days unlike phones).

So how do they make profit of it ? I’m confused

This post is the same as a post I made 1 hour ago that corrects some words, sorry for my bad english.

In: Economics

Answer 1

You’ve just discovered why the employees push the acceories and replacement plans so hard. The profit margins on items like phones and laptops can be so thin, the only reason to carry them is to jelp increase the market for accessories, which have much higher profit margins. I was years ago when I worked retail I was once told by the store manager it’s better not to sell a laptop than to sell a laptop without convincing the customer to also buy accessories on the same transaction.