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What is good profit margin?

Is 55% profit margin good

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It’s good, but what’s the context?

For instance,

How long does it take you to source that item (or items)?
How long does it take you to make that profit? 1 day? 60 days?
Is this one=off item you are addressing … is it repeatable and scalable?
In a vacuum, a 55% gross margin is remarkable, period.

A 55% profit margin (revenue less ALL operating expenses)? I’ll believe it when I see it. Even the non-products company Google has not exceeded 40% over the past 10 years on a pre-tax basis. And they have one of the best profit margins on the planet.

Other points

’ll answer this differently, from a very microeconomics perspective.

The answer is — not necessarily.

Why? First off, the business may not scale, and, second, you have to pay yourself.

Example: There are people who sell bottles of water by the highway to motorists stuck in traffic.

A case of water may be $6 with tax and deposits. That is just 25 cents per bottle. Maybe buy a couple of bags of ice to keep them cold. So, what, let’s say 35 cents. They sell them for $1. So they make 65 cents per unit.

But, so what? There are only so many cars you can hit. Make $100 on a good day. After expenses, you're making minimum wage.

So, without volume and ability to grow, your 55% margin is meaningless.

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August 10, 2021 at 4:45:06 PM

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