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The cost of these cables is sub-dollar. Like probably less than $0.50. Let's say $0.50 for argument's sake. Bringing the cost down a penny means 2% more sellabl
by andrewstuart2 4y ago
The cost of these cables is sub-dollar. Like probably less than $0.50. Let's say $0.50 for argument's sake. Bringing the cost down a penny means 2% more sellable product for the same input materials. And when the margins are in the $10 range, that's a huge amount of leverage. They're not passing the $0.01 savings along to their customers. Or even if they are (and say, charge you $0.01 less), it's still a huge differential after you consider the 20x margin.
Quick math:
Let's say 1 million cables at $0.50. That costs you $500k. If you get the cost down to $0.49, you just enabled another 20k cables to be manufactured, and another $200k in profit.
- deleted 4y ago[deleted]
- deleted 4y ago[deleted]
- midasuni 4y ago1 million for 500k and sold for 10m is a 9.5 million dollar profit 1 million for 490k and sold for 10 million is a 9.5 million profit. 10k is a rounding error.
- andrewstuart2 4y agoThat extra $200k you made by saving a cent literally bought you your next $4M profit if you reinvest it. Not a rounding error in any way when you're reinvesting at such a massive margin.