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

The big thing is that when you hear things like “stores operate on 10% profit margin” that is for the entire operation, not the individual items for sale.

The individual numbers will vary depending on the type of store, but the average retail store is about 50% product cost, 40% operating expenses, 10% profit.

So stores are buying things for about half and what they are seeling them to you (again this number varies depending on the item).