What is good profit margin?
Is 55% profit margin good
It’s good, but what’s the context?
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.
’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.
Question asked by
August 10, 2021, 4:45:06 PM