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
A lot of good points here, but there’s a more basic one, too: he can lower his prices to cut those losses. Say, for example, the new model phone is coming out in a month and he wants to get rid of his old stock before interest really drops, he might sell them at cost, or even lower. Better to lose $25-50 on a phone rather than $450.
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