Largest profit percentage for a simple, one piece item?

I’m not at all sure a cost of 1/10 of a cent to manufacture is correct. But lets say it’s the cost of the aluminum. Whose profit are we trying to figure out? Some company is going to make that aluminum into foil and another company will most likely make it into various size pans. The manufacturer might sell directly to Walmart or it might go through a wholesaler first. The pan will most likely go to a Walmart distribution center before going to the store. And every one of those steps involves employees and pay and benefits and expenses to operate buildings. The employees are not just the people who make the foil or the trays but HR , accounting , janitors, security guards etc. My guess is that if Walmart is selling it for $6, they are probably buying it for around $3. And the other $3 has to cover Walmart’s profit and overhead. I looked online for Walmart prices and found only one that was $6 - the others were so much less ( anywhere from a little over $1 for one to $5.50 for 2 ) that I have to assume the $6 uses heavier foil than the less expensive ones. And it’s a name brand as well as kosher certified which adds to the costs.

I found some prices at Steam Tables and Roasters - Aluminum Roasters - WholesaleFoilPans.com

100 medium roasting pans $100
50 Rectangular roasting pans $86
25 large oval shape roasters $63

There’s a discount for buying 12 or more cases which Walmart certainly would - but the discounted price for the oval ones is $54 for 25 . That’s still $2 each, I could not find a price for 10,000 cases- I’d actually be surprised if that company would even sell that quantity.

The $16/case for 10,000 cases price was from Alibaba, so most likely directly from the manufacturer. They sold in smaller quantities, but I think the minimum was 50 or 100 cases. I also didn’t bother to check if that included shipping.

So that particular item probably has a several hundred percent markup from Walmart’s purchasing cost (not including Walmart’s cost to handle the item). This leaves plenty of room to offer discounts at Thanksgiving, and still be profitable.

I can tell you that the brand name ones only yield a normal profit to the retailer. Buy for $1.50, sell for $3.00, maybe $4.99 in a CVS:

This is a 2-pack with a lid and their store brand (which usually means higher margins). I’d be surprised if CVS’s cost on these is less than $1.50.

So it’s a good margin on a percentage basis, but a $3.50 margin on an item you do very little volume in is nothing to write home about.

Walmart has the brand name (EZ Foil) equivalent product for $3.72. I would expect the cost on that to be around $1.50 as well. EZ Foil has some “brand equity” but Walmart has negotiating leverage compared to CVS.

So maybe the original manufacturer has a margin of 67% to cover marketing, distribution, etc. So it only costs them $0.50 to make two roasting pans with lids.

Comparing the price of an item in a store two miles from your house with 80,000 other items you might randomly want that day to the cost of the raw materials is pretty silly.

Generally speaking, the lower the turnover of an item, the higher the margin. People are sensitive to the price of eggs, milk, bread and bananas because they buy those every week. Margins all through the supply chain will be small.

Price sensitivity on items purchased very infrequently will be much lower, so you have higher margins all the way through. Coin batteries are the canonical example. CVS might very well be selling them for 10X what they buy them for, but they may only sell one for every one that gets stolen. But if you need a coin battery, you’re not going to drive around to buy it for $6.99 instead of $9.99. You might well buy it online for $2.99.

/hijack?

We were recently discussing (or, at least I was – maybe I was talking to myself, as so often happens both here and IRL) how to save money at the grocery store. Buying generics is one good way to do that. An example I used was salt: there is usually a generic house brand of salt available next to the more ubiquitous Morton’s: same size cylindrical tube and everything. Today at the grocery store I remembered that comment so I checked the price to see if I had been talking out of my ass: $0.89 for a carton (I dont know how big those cylinders are. Maybe a pound?) of Essential Everyday iodized table salt. $3.99 for the the Morton equivalent.

Anyway, buying name brand food is a good way to get ripped off.

Having said that, name brand supplements is something I do buy. The way my pharmacist explained it to me, supplements aren’t regulated by the FDA so the closest thing that exists to independent quality control is a USP verification. Lack of USP inspection doesn’t mean the supplement is snake oil, but it does increase the chance you’re buying nothing but filler. I learned this the hard way when I bought BiMart brand melatonin and they didn’t do bupkis for my insomnia. I was up to 30mg a night, and nothing. That’s when my pharmacist told me about the USP thing. I switched to Nature Made(which he didn’t carry, so it wasn’t a money thing for him) and now 5mg of Nature Made melatonin actually means getting a night of half-decent sleep. My doc mandates I take both a Vitamin D3 supplement and a low-potassium multivitamin, and I’ll never take one of those that doesn’t have a USP mark.

I think Kirkland is the only generic I’ve found that is USP inspected.

/carry on

It was mentioned in a recent thread that for aluminum foil, at least, there’s literally only one supplier for all of the US. Reynold’s or your house brand, whatever the house, are all made by Alcoa.

Though I don’t know if they do the stamping into disposable pans and such, or if they have any competitors for that.

How about a hunk of bronze selling for ~$141 M?

https://cdn.shopify.com/s/files/1/0849/4704/files/L_Homme_au_doigt_by_Alberto_Giacometti_ 6930b4f7-e928 -4249-b6f8-414b8bad4b83_grande.jpg?v=1587453311

The OP says that he’s not counting things like art.

Medical devices have been mentioned but what about pharmaceuticals? Single doses can cost as much as $3.5 million. Stripped of the R&D costs, the material cost is probably relatively negligible.

Yabutt… Profit is cost minus expenses, correct? Not cost-to-produce but total cost. My wife’s MS drugs are crazy expensive, but there’s a new and better drug every few years, so those R&D costs get amortized pretty damn fast.