What is the ideal Profit margin

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Fish the Mod | 14:22 Fri 02nd Feb 2007 | Business & Finance
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I was in electrical maunufacturing for years and I was always under the impression that if you manufacture it should be 35% and retail 25% profit margin. However is this case with anything. A friend of mine put together complication CD's ( doesent physcially put them together) but says his matk up is 120%. He claims that I must be wrong. Confused.


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depends on the industry. Takeaway foor is 55 to 65%

some other industries hiogher...some lower
Agree with that - its as much as the industry will bear.
In the clothing industry, clothing design labels are placing contracts in China that purchase a �100 (retail) coat at about �10 - they pass it onto the retail outlet at �50, who sells at �100. That's why retailers can discount so much at sale time and still make a bit of money.
This is gross margin I refer to - not net margin.
All correct but a general rule of thumb is 25% but remember to get a 25% gross profit margin you need to add 33% to your buying price
i.e �100.00 cost price x 33.3%= �133.30
Now �133.30 x 25% = �33.30 your actual profit margin.
Also i dont know many manufacturers that would gladly accept a margin as low as 35% but that depends on the industry as Zorro says. Your question possibly should have been "whats an honest profit margin" as there is no hard and fast rule as to what profit margin you should be looking for as that depends on many things like the obvious one..... COMPETITION.... but if it helps my opinion for what its worth is it dont matter if you buy an item for 10p and sell it for �200 thats an honest profit/mark up as long as your customer is happy to pay �200 for that item in the first place

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