A wholesaler gets from sixty to seventy-five cents from the retailer for goods sold by the retailer at one dollar.
Some goods are sold for less but only at a reduced quality, or the loss of part of the legitimate profit.
When you put in new machinery that cuts cost you keep the saving in your own business. Talk quality, maintain the selling price and put part of your saving into selling endeavor to increase your business and the other part into a bank account. Cutting prices pays no one a profit.
You ask how much profit there is in pop-corn?
You know of fortunes made in pop-corn; some from buttered pop-corn; some from sugared pop-corn. Some from pop-corn cakes that sell for a cent, some from pop-corn packages that sell for five cents. In one case the goods were sold all retail, in another at wholesale. In one case a local business, in another nation-wide business.
What is profit? Net profit is the return over and above all expenses. Gross profit is the return over the cost of simply making the goods.
What is cost? Prime cost, which is the material plus the actual labor of making, or it may be the total cost with all the expenses of doing business added.
You might make a gross profit of two hundred per cent. of your prime cost, which might be sixty per cent. of your sales and then you might make twenty per cent. net profit on your sales, or sixty per cent. net profit on your prime cost. But it is possible to come out with no net profit in the end. In other words you must understand that the part of the cost that will determine your profit is what is called the “overhead,” meaning what is termed the operating expenses, something that is up to you and you alone.
To prevent errors you should figure your profit percentage on your selling price, because the sales figures are always handy to get at.
Thus if you find the gross cost of a box of pop-corn to be twenty-five cents and you sell it for fifty cents, your twenty-five cents profit is fifty per cent, of your sales.