[balrog666]

That is very true. However, it is also true that any business that consistently sells its product at less than its total costs (including tax costs) won't be in business on a long term basis. Also, any business that doesn't provide its owners a competitive rate of return for their investment won't be able to attract capital in the future.

True, but if you can sell an item for $20, it really doesn't matter whether it cost $0.02 or $.25. Or $5.00.

[phil_will1]

"True, but if you can sell an item for $20, it really doesn't matter whether it cost $0.02 or $.25. Or $5.00."

How many businesses do you know that enjoy those kinds of overall profit margins? I was in technolgy for a number of years and my experience was that, IF you were quite fortunate and had a proprietary product with a significant advantage over its competition, you might be able to enjoy 50 - 60% gross margins for some time until the competition caught up. However, those were gross margins and, unless you could generate huge volumes, your before tax income was nowhere near 50%.

If there were any businesses out there recording those kind of enormous OVERALL margins, capital would be flocking to invest in them.