question on profit margins

[LUBOLD8431]

YOU are the punk drbill...

He is still caught up about running a dive shop in the 60's. THAT's WHAT MY REFERENCE TO THE 60's was ABOUT. HAD NOTHING TO DO WITH AGE!!!!!!!! It has been a LONG time since he has RUN a dive shop, thats all I was pointing out...

YOU are the one that JUMPED to conclusions that I was hammering him about his AGE!!!!!!

YOU owe me an apology, drbill. Yes, you DID misinterpret my comments, because even with your self proclaimed SKILL with the english language, you STILL saw something that wasnt there!!!!!!

If you read a comment of his in another thread, you know where this whole thread came from...

I suggest before you make an accusation like that again, get your facts straight...

CHUCK

drbill once bubbled...
LUBOLD8431- Where do you get off making a comment like that? You sound like a 14 year old computer geek with no socialization skills. The fact that you're twice that age really astounds me. Your ageist comments are unwarranted and inexcusable IMHO. Be glad there were those of us in the 60's (and earlier) to pioneer SCUBA so folks like you could enjoy it. If you think I'm flaming now, wait til I turn on my afterburners!!!

I found quimby's comments, posted prior to yours, to make sense. I found yours in response did not make sense relative to what he said.

In case your "adolescent" mind (possible at any age) doesn't realize it... we had cost factors like rent, utilities, etc., back in the 60's too. They may have been lower absolutely than today's but so were sales prices. Those costs had to be paid for out of the gross profit from sales and services (revenue minus direct costs).

If you actually read what quimby said, he recognizes all of that... you're the one who seems to have jumped to conclusions.

Necessary gross profit to meet operating costs is highly dependent on sales volume. If a small LDS has a limited local market, they may need a higher profit margin on each product. If a big warehouse store does high volume, it needs much less (and therefore can discount if the manufacturer allows it). Look at the example of grocery stores which may have profits of 1-3% but achieve reasonable profitability through volume.

Dr. Bill

PS- If somehow I've misinterpreted your comments, I apologize, but I'm highly trained in the English language so I don't think that was the case.

 

[CincyBengalsFan]

quimby once bubbled...
FACT: The average dive shop in the USA today needs to make a 57% profit margin. Any business of diving seminar will tell you this.


This was posted on another thread by a shop owner and from what else I've heard it is probably true. I had a shop for over 5 years but back in the late 60's. Then the discounts from list were about 48 percent but you also discounted about 20-25percent. I personally believe the present profit margin "as above" is out of line and a product of poor industry management. But I really just wanted to know what others think.
Yes and if Mike is around I would like to know his thoughts also.

I was the LDS owner that posted the 57% profit margin. I don'tpersonally have to make this since we own the property and do not rent. But I'm sorry. The average LDS in america needs to make a 57% PM to support his family, pay employees and pay the bills..All the bills. Quimby has jumped my a** ever since posting this. Oh well...Who doesn't

 

[TCDiver1]

CincyBengalsFan once bubbled...


I was the LDS owner that posted the 57% profit margin. I don'tpersonally have to make this since we own the property and do not rent. But I'm sorry. The average LDS in america needs to make a 57% PM to support his family, pay employees and pay the bills..All the bills. Quimby has jumped my a** ever since posting this. Oh well...Who doesn't

CBF, you mean gross profit, not net profit, right?

For those that don't understand the difference, gross profit is what you make before you pay the costs of doing business such as payroll, taxes, rent, utilities, etc. Net profit is what you made after paying all costs.

Many of you would be shocked at how low a 57% gross profit margin really is. Its not that bad in comparison to many things you buy every day.

 

[CincyBengalsFan]

gedunk once bubbled...


CBF, you mean gross profit, not net profit, right?

For those that don't understand the difference, gross profit is what you make before you pay the costs of doing business such as payroll, taxes, rent, utilities, etc. Net profit is what you made after paying all costs.

Many of you would be shocked at how low a 57% gross profit margin really is. Its not that bad in comparison to many things you buy every day.

NET PROFIT?? Is there such a thing in a LDS? I'm just being a butthole, but you know what I mean. There just isn't much of a net profit in a LDS.

 

[Warren_L]

CincyBengalsFan once bubbled...


I was the LDS owner that posted the 57% profit margin. I don'tpersonally have to make this since we own the property and do not rent. But I'm sorry. The average LDS in america needs to make a 57% PM to support his family, pay employees and pay the bills..All the bills. Quimby has jumped my a** ever since posting this. Oh well...Who doesn't

I have always thought that employee payroll (including any pay to the owner) and bills for the business come out before profit margins are calculated. I don't quite understand - I would think that as long as the LDS is at a zero profit margin (ie. able to cover your costs from your net sales) or higher, it should be able to survive, just like any other business.

 

[MikeFerrara]

Well...

I never got paid while running a shop. My wife never got paid. I never got back any of the cash I put into it and I could never afford to pay any one else. The shop income paid the rent, insurance and other oporating costs most of the time but we worked thousands of hours and it only cost me fifty or sixty thousand dollars for the privilage of doing it.

Calculate the profit margin on that. LOL

 

[CincyBengalsFan]

wlo93 once bubbled...


I have always thought that employee payroll (including any pay to the owner) and bills for the business come out before profit margins are calculated. I don't quite understand - I would think that as long as the LDS is at a zero profit margin (ie. able to cover your costs from your net sales) or higher, it should be able to survive, just like any other business.

Profit Margin is actually what you make per inventory item.

If a mask costs $25.00 and I sale it for $50.00. That is just a 50% profit margin and a 100% mark-up.

 

[DeputyDan]

Sales price $50

Cost of sale 25

Gross margin 25
(or gross profit)

Operating expenses 20

Net profit (before income
taxes) 5

Income taxes 2

Net profit (After
taxes) 3


Total profit to business is 6% = 3/50

 

[CincyBengalsFan]

DeputyDan once bubbled...
Sales price $50

Cost of sale 25

Gross margin 25
(or gross profit)

Operating expenses 20

Net profit (before income
taxes) 5

Income taxes 2

Net profit (After
taxes) 3


Total profit to business is 6% = 3/50

YEPPERS....

 

[DeputyDan]

would produce a sales price of $39.25

1.57 * 25 = 39.25

representing gross profit of $14.25

and a "BIG" net loss before taxes to be LDS !!!