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
Adding to what others have said, some retail stores used to be able to charge a fee to get a manufacturer’s products on their shelves. Additionally, promotional staff/salesmen are often paid for by the manufacturer to, to sell their specific goods.
On the goods manufacturer’s end, such costs would have to be built in to the product’s price. Actual raw materials, labour and transport costs must be a fraction of the final retail price (or even the wholesale/”factory” price) otherwise the manufacturer wouldn’t be able to turn a profit. Outsourcing manufacturing (to China or wherever) has certainly helped drive down costs for manufacturers since… The end of World War 2, probably.
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