Friday, May 06, 2005
The Ten To One Ratio
Years ago I learned that an item with a list price of $100.00
cost $12.00 to manufacture...The $12.00 only represented
the cost of raw materials, packaging and assembly labor...
Over the years I have found that this formula has not
basically changed...If the list price is $10.00 then it cost
$1.00 to make...The $9.00 difference is consumed by
warehousing costs, all salesmen's commissions and retailer
profit...
Of course there are sales, quanty buys and other marketing/
sales incentives which effect the price, but the next time you
are in a .99 cent or $1.00 store look at the item you want to
buy...Did it only cost .10 cents to make?.....Pumps
cost $12.00 to manufacture...The $12.00 only represented
the cost of raw materials, packaging and assembly labor...
Over the years I have found that this formula has not
basically changed...If the list price is $10.00 then it cost
$1.00 to make...The $9.00 difference is consumed by
warehousing costs, all salesmen's commissions and retailer
profit...
Of course there are sales, quanty buys and other marketing/
sales incentives which effect the price, but the next time you
are in a .99 cent or $1.00 store look at the item you want to
buy...Did it only cost .10 cents to make?.....Pumps
# posted by Pumps @ 2:55 PM 
