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"it’s impossible to make real money selling either Android phones or Windows computers" No. 99% (well not quite, but most) of the economy works this way. It's

"it’s impossible to make real money selling either Android phones or Windows computers" No. 99% (well not quite, but most) of the economy works this way. It's almost an entirely thin margin business world. Very, very few companies are making sweet margins unless there is some sneaky reason i.e. political patronage, niche markets, etc. etc.. Drugs and Healthcare work on high margins depending on how you look at it. But agriculture, natural resources, almost everything manufactured, entertainment, restaurants, transportation, energy ... hosting (!) most things are low margin businesses.

scarface74 8y ago
If I look at my largest purchases, it's not about the cost it took to make it. Homes - homes sell based on location, school zoning, demographic make up (sad but true), etc. and new home builders can often sell at a premium based on services and customization Cars - sell based on brand more than costs Furniture -- One word - Ikea Exercise equipment - Peleton vs NordicTrack Even upscale restaurants have higher margins than lower scale ones. Groceries - Whole Foods Clothes - completely based on brand
- sonnyblarney 8y ago
  Aside from real-estate (an asset, not a product or consumable), about everything you mentioned is hyper-competitive and low-margin. 'Brand' does not guarantee margin, in most cases, it simply provides a means to exist. Peleton might make a hefty gross margin on their bikes, but they're also probably losing money due to huge marketing, R&D and operating costs, and they may never make a dime. IKEA makes a solid profit, but only because they have a massive business at scale, at which point those thin margins add up to something big. Same thing for Walmart, Amazon, and any large Grocery store chain. Those are all vicious businesses. High operating costs, huge working capital requirements. It's ugly and cut-throat. I'm making a hardware product right now, even if we're successful, our net margin per unit will be a tiny fraction of the MSRP. Of MSRP about 60% goes to retailer, about 25% cost to manufacture, about 5% marketing on the unit level, and then we have 10% to pay all our fixed and regular operating costs, brand marketing, R&D etc. and then taxes.

scarface74 8y ago

If I look at my largest purchases, it's not about the cost it took to make it. Homes - homes sell based on location, school zoning, demographic make up (sad but true), etc. and new home builders can often sell at a premium based on services and customization Cars - sell based on brand more than costs Furniture -- One word - Ikea Exercise equipment - Peleton vs NordicTrack Even upscale restaurants have higher margins than lower scale ones. Groceries - Whole Foods Clothes - completely based on brand

sonnyblarney 8y ago
Aside from real-estate (an asset, not a product or consumable), about everything you mentioned is hyper-competitive and low-margin. 'Brand' does not guarantee margin, in most cases, it simply provides a means to exist. Peleton might make a hefty gross margin on their bikes, but they're also probably losing money due to huge marketing, R&D and operating costs, and they may never make a dime. IKEA makes a solid profit, but only because they have a massive business at scale, at which point those thin margins add up to something big. Same thing for Walmart, Amazon, and any large Grocery store chain. Those are all vicious businesses. High operating costs, huge working capital requirements. It's ugly and cut-throat. I'm making a hardware product right now, even if we're successful, our net margin per unit will be a tiny fraction of the MSRP. Of MSRP about 60% goes to retailer, about 25% cost to manufacture, about 5% marketing on the unit level, and then we have 10% to pay all our fixed and regular operating costs, brand marketing, R&D etc. and then taxes.