It's amazing how some companies make good money and run profitably.
Take, for example, an advertisement I saw behind an auto-rickshaw today that offers holograms, at 1 paisa per piece. I couldn't believe it - 1 paisa is the selling price of something? I am wondering how much can the seller earn out of this? Assuming that he's selling it at double the cost, it would still get him just 0.5 paisa of profit per hologram. And because it's a company, 50% of that would be taxed. That leaves 0.25 paisa per hologram. Now, if he needs to employ one factory worker for a modest salary of Rs. 5000 per month, just count how many holograms he must make per month?
5000*100/0.25 = 20,00,000 - Twenty lakh holograms! Just to support one factory worker!
I am amazed how this works out. There must be hundreds of people working in that company - many of who would be getting much much more than 5000 Rupees per month. In addition, it needs to invest in all the massive infrastructure and logistics, and advertisements like the one I saw today.
Churning out hundreds of crores of holograms is one thing, but getting sales deals closed for such a massive amount, month on month, every single month, is another astonishing feat that I can't even imagine how it's done.
It's not just with this hologram company. Chocolates that sell for 50 paisa in small retail shops - they have a huge distribution chain to support in addition to being profitable to the manufacturer. Assuming that the retail shopkeeper gets 10 paisa, the middleman gets 10 paisa, and the manufacturer sells it at double the cost price, and pays 50% tax, he gets 80/(2*2) = 20 paisa per chocolate. And it's not at all clear to me as to how you could make crores of children eat your brand of chocolate, each month, which is what you must accomplish to remain profitable.
Fantastic, isn't it? I would love to discover how this works.. maybe some day I'll figure it out.
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