What are giftcards? Where is the money? How do they get the money? Where is the profit margin?
In: Economics
Let’s say I run a bakery. I sell gift cards that are only good at my bakery. If someone wants to come in and buy a $50 gift card, great. You give me $50 and I tell the computer system that this particular gift card has $50 of value in it. That’s $50 for me without needing to sell anything right now. Now, the guy who gets the gift card might come back and use the gift card, or he might not. If he doesn’t, then I just made straight $50. If he does, then I just sell him $50 worth of products just like I would for anyone else. He doesn’t need to pay me because that stuff was already paid for earlier, but I still make my profit margin on it just like normal. Just because it was paid in advance doesn’t change anything.
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