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Quilan Mesura
Pangalactic United Trading
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Posted - 2008.01.31 08:50:00 -
[1]
as i'm no studied economist there'a a question thats bugging me for some time: what's the correct name of profit-percentage meaning either % of buy-price
or
% of income
are there 2 different names for those percantages or something?
it doesn't matter for my business ofc but it's interesting for communication...
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Oberon Theros
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Posted - 2008.01.31 09:18:00 -
[2]
Well, there are two terms although they are marketing terms not economist terms,
Cost-plus pricing; Means to set the price at the cost of production/wholesale pricing plus wanted profit margin.
Target return pricing; Meaning to set your price to achieve a certain ROI.
Need anymore info Google "market pricing strategies".
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Quilan Mesura
Pangalactic United Trading
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Posted - 2008.01.31 09:29:00 -
[3]
thx for the answer but im not sure if thats what i wanted to know.
if i say: "i make 50% profit"
is this generally understood as 50% of buy-price (a 50% plus, income=150% of buy-price) or as 50% of income (income=200% of buy-price)
thanks in advance.
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Kylar Renpurs
Dusk Blade
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Posted - 2008.01.31 09:31:00 -
[4]
I think you'll find what your referring to is generally a return on investment (ROI). For example, I invest 1 million in, well, something (say, manufacturing), and I sell my item for 1.1 million, total profit 100k. Thats 10% profit to me (or 10% ROI)
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Quilan Mesura
Pangalactic United Trading
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Posted - 2008.01.31 09:48:00 -
[5]
ah yea. ROI. now i remember :)
well thats what i use in my stats too - because mainly i want to know what % i make on top of my investment.
but we use stats at my job where everything is calculated in relation to the income, so i get confused with the terms although i know how to work with them i haven't got the theoretical background.
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Shadarle
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Posted - 2008.01.31 13:48:00 -
[6]
ROI is what most people use to decide if something is worth trading/manufacturing/etc.
The monthly return is what most older traders care about. I know I personally strive to keep my average monthly returns over 10% at all times. Meaning for the last 30 days I have made 10% returns on my entire net worth. This becomes much tougher when you're only able to trade with 1/2, 1/3, 1/4, 1/5 of your total net worth because you have so much. So you either have to find a way to make 10% returns while only using 1/5 of your isk or you need to find ways to invest the other 4/5 of it at a decent RoR so that it is easier to achieve 10% overall.
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Daerkannon Shimmerscale
Gallente Paxton Industries Paxton Federation
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Posted - 2008.01.31 16:06:00 -
[7]
The later way of determining profit (50% of sale price is profit) is called margin in the industry that I am indirectly employed by. Frankly I think that it's an odd way of looking at things and is mathematically inconvenient.
Consider a 99% and a 99.9% margin. Doesn't sound like much of a difference, does it? Yet the later item is priced 10x more than the 99% item. Your sales price goes to infinity rather quickly as your margin approaches 100%.
Now selling at a loss (loss leaders) isn't common in Eve, but consider if you wanted to give something away in order to draw people in. (One free webber II with every warp disruptor II purchase!) In a margin calculation you now have a negative infinite margin. Neat, huh?
There's also funny stuff going on when your cost is zero. My conclusion is that margin isn't nearly as useful as ROI. --- Honest officer, the dwarf was on fire when I got here! Can't find a mechanical engineering agent? Need a non-Caldari Navy agent? http://www.eve-agents.com/ for all your agent needs! |
Nobues
Gallente Nomadic Wayfarer Syndicate Te-Ka
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Posted - 2008.02.01 04:58:00 -
[8]
Profit is simple
Revenue - Expenses = Profit
If you have 10m isk, and you spend all 10m to make a product or to run a service (your expenses), any revenue you get from that product or service (selling your product or renting your service) will be subtracted by your expenses and if you have a positive balance you have profit.
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