The Importance of Gross Margins

[@pradhumnkanase8381]

I think you are getting it wrong for the 50% margin: I spend 50c and get 1 dollar back yes my gross margin is 50c but now I have 1 dollar in total with which I can make 2 cookies and then 4 then 8. So the multiplicative factor works on 50%margin as well. If 50% is at zero growth then by that logic all the companies who have gross margin less than 50 are doomed which is definitely not the case.

[@alphapinggmbh6916]

Don't forget overheads that need to be paid too. Less margin works if you have easy access to finance.

[@moshemo613]

Perhaps I am wrong - but I think this is how the math goes. I BORROW 50 cents to make one cookie. I now have NEGATIVE 50 cents. I then sell a cookie for 1 dollar. I now have a dollar in cash. I take 50 cents of that dollar and repay the loan. I now have 50 cents spare to make another cookie without having to take on any more debt.

[@bbb-1-2-3]

Yes you make profit... but it's a linear growth, not exponential. since every next batch you make, you're not doubling (67%) or tripling (75%) but instead profit remains constant (50%)

[@SAMIR-consulting]

I did not learn it like that Simple and easy, thank you

[@larahporter8123]

Wow!!!