Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
I think it's in the neighborhood of 5% with significant variance among sectors, e.g. oil and supermarkets run on thin margins. Big Oil makes up for it in volume.
So does Little Oil, to the extent that they can. Gas stations make only a few cents per gallon on fuel sales. Inside sales, particularly the soda fountain, are their money-makers.
Impossible question. Industry norms vary drastically. An "average" would be completely meaningless and extremely misleading.
This. It's going to vary a lot by industry. I can tell you that for a large homebuilder the typical net margin is going to be 10-20%. My company's overall net margin last year was about 15%.
So does Little Oil, to the extent that they can. Gas stations make only a few cents per gallon on fuel sales. Inside sales, particularly the soda fountain, are their money-makers.
Little Oil is manipulated by Big Oil, the neighborhood gas station has its prices pretty much dictated by a micro managing supplier that charges what the neighborhood will bear.
Little Oil is manipulated by Big Oil, the neighborhood gas station has its prices pretty much dictated by a micro managing supplier that charges what the neighborhood will bear.
The neighborhood gas station owner does not buy fuel directly from Big Oil, but from a middleman called a jobber.
Step 1: A store owner calls a jobber and places an order for fuel. They negotiate a per-gallon rate that the store owner will pay the jobber.
Step 2: Once that agreement has been reached, the jobber then dispatches a tanker truck to the loading rack to lift the fuel. The loading rack bills the jobber for the fuel at whatever per-gallon rate is in effect at the time the the tanker truck driver prints the Bill of Lading for his load. This price can change several times throughout the day.
Step 3: After the delivery, the jobber receives invoices from the loading rack and the trucking company, and issues an invoice to the store owners.
Wow, some pretty good and realistic responses here.
The results of a survey back in 2013 (by Reason-Rupe) that asked the public "What percentage of each sale dollar is profit, after taxes?" inspired the question posed here in city-data.
I left the notion of profit vague because, as some pointed out, there are different ways to define it, and because the survey was measuring perception at a "ball park" level (the general public probably don't have a sophisticated view of what different ways of defining "profit" are) - not precision.
As promised, here goes....
It seems that the public perception is 36%!
Reality is they over estimated by about five times the actual margin!!
As some pointed out here, there IS a range and the average differs by industry. None met that level, though Telecom and REITs came close, at over 30%.
I have not explored the database, but I strongly suspect that those industry numbers vary significantly over time, especially over long time periods (e.g. property values have been on a steady march upwards lately - some say several markets are in or are approaching bubble territory).
Why is this important?
As the article says: "The public that believes in the fantasy-world of sky-high 36% profit margins would naturally think companies are just being greedy and stingy when don’t pay higher “living wages†and have to be forced to do so through minimum wage, or living wage, legislation"
The strange thing is, if the public thinks profits are that high, why are they not investing more in stocks? Could it be cognitive dissonance?
The typical restaurant with a good customer base prices food at 1/3 for ingredients, 1/3 for overhead, and 1/3 for profit. Fast food is closer to 50% profit.
Interesting to think about if profit is after all costs. So, if I were a business and paid all my costs, which in this case would equate to home, food, utilities, etc, as well as a salary to me for managing my business and then I got a 5% extra on top, that actually wouldn't be too bad. In a billion dollar business, that 5% would be 50 mil.
Then, there is the problem of what is the measure of "Output"?
Is it National Proft vs National Output, Domestic Profit vs Domestic Output, or National Profit vs Domestic Output? To get apples to apples BOTH Foreign Sales and Profit from abroad should be counted (or not counted), but not one without the other. We cannot tell from the chart provided.
There are other issues to contend with (e.g. double counting) that are addressed in the following article, which discusses measuring profit margins from an investors' point of view, using aggregated data from BEA (i.e. NIPA tables): Profit Margins: The Death of a Chart | PHILOSOPHICAL ECONOMICS
Bottom Line is ... "Utilizing the data in NIPA Table 1.14 (FRED), we end up with the following chart, which is the only accurate NIPA chart of net profit margins for the macroeconomy, and the only NIPA chart that anyone should be citing in this debate" - per the article linked:
BTW, it is particularly interesting in the article I linked, that NOwhere is there anything close to the numbers depicted to those in the chart you provided, and they provide several variations of charts, starting with two versions at the very top which they claim are common in the dispute of measuring aggregate profit margins in the economy.
Last edited by Transplanted99; 04-04-2015 at 02:54 PM..
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
