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Retail typically has low single-digit profit margins and a massive inventory risk. Apple has zero risk and 80% profit margins (on the App Store anyways). Last
by mthoms 5y ago
Retail typically has low single-digit profit margins and a massive inventory risk.
Apple has zero risk and 80% profit margins (on the App Store anyways).
Lastly, retail stores are where you typically purchase one-off items. They don’t keep charging you for that refrigerator month after month.
The two business models aren’t really comparable.
- doctor_eval 5y agoNo, I’m talking about groceries. Food, stuff you need to live. Gross margins in Australia for the top two chains were about 28% last I looked.
- mthoms 5y agoProfit margin is more useful metric to determine if you're being gouged - Grocery stores: < 3% Profit margin, huge inventory risk. App store: > 70% profit margin, zero inventory risk. Put another way: If grocery stores cut gross margin by a couple points they'd be out of business. They are basically charging the absolute bare minimum they need to make a profit. The reason? Competition. Apple could drop their App Store gross margin by 50% and still have one of the most lucrative operations in the world.