08-06-2009, 12:15 PM
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#36 (permalink)
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Quote:
Originally Posted by zZSportZz
I think people are mixing overhead expenses and profit together. Everything a company sells has overhead attached to it as well as profit. If a manufactuer charges $1000 dollars for an exhaust and is costs them $500 dollars to make it...is that 100% profit? No..unless they have zero overhead. They have to pay the bills: 1)salaries, 2) utililities, 3) leased spaces, 4) R&D, 5)benefits for employees, etc..the list goes on and on and on. These are all attached to the sale of any product. Its just the cost of doing business. I work for a government contractor..I am a "product" to the government. They pay my company TWICE what I make.....and yet my company only see an 11% profit on my employment as a direct charge to the government as specified by the contract. The rest goes towards benefits, my office space, computer...everything I need to function.
This is why online wholesalers can sell stuff so much cheaper than Best Buy....they have almost no overhead to recoup.
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My point in bringing up overhead expenses was to point out that its not just a few pieces of piping thrown together and charging 10x as much for what the material costs was. A lot of people have the view point that if the piping costs $200 in material and the exhausts costs $2000 then they are making $1800 profit thus having a tremendous margin (extreme example I know). Yes overhead is just part of the cost of doing business, but it is also factored into the sale price. Some parts take longer to make whether it be by R&D or actual production time. This overhead is usually taken into consideration when a company prices an item. I know we are on the same page here, just trying to clarify 
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