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Old September 22, 2012, 01:27 PM   #32
Frank Ettin
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Join Date: November 23, 2005
Location: California - San Francisco
Posts: 6,910
Quote:
Originally Posted by Skadoosh
Quote:
Originally Posted by KyJim
Skadoosh --

You've obviously never run a business. In your analysis, you figured $10 per hour labor (which is not that much above minimum wage) but you forgot the employer's contribution to social security, unemployment, and worker's comp. A good employer also tries to help with health insurance. You've also got to consider utility costs, cost of work space (rent or it's equivalent), and other overhead. All of a sudden, that "huge" profit margin is gone.
...if you had actually looked at the the Theis website, you would realize that it's a one-man operation run out of his garage/shop or home.
This is off topic, and there's no need to continue this discussion. But everyone ought to understand that there are a variety of costs associated with running a small business, even a one man shop, including --
  • Capital expenses associated with the purchase, maintenance and replacement of tools and equipment;

  • The cost of capital tied up in inventory and one's stock of supplies and materials (including such things as office supplies and packing/shipping material);

  • Various taxes, including Social Security tax at the "self-employed" rate, business license expenses, etc.;

  • The cost of maintaining a facility at which business is conducted (you might be using your garage, but that means you no longer have a garage for normal, personal use);

  • Labor beyond just making the product (including: taking, receiving and keeping track of orders; shipping completed orders; customer service; maintaining a website; receiving, unpacking, and putting away materials to be used for production of the product; paying business bills; accounting, i. e., maintaining the financial books and records associated with running the business; and preparing business tax returns, including paying quarterly estimated tax payments).
The fact is that we have no way, without detailed information, of estimating what someone's true small business profit might be. And in any case, it's irrelevant. If you don't like the price, don't buy it.
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