Ask the average person and you get an answer - usually north of 30% Real life profits after taxes? The public thinks the average company makes a 36% profit margin, which is about 5X too high - AEI Locally, oil cos pay $0.88 of every dollar made in taxes. Then comes the expenses. Posted mostly as food for thought.
Really depends on the business and product. A hog confinement makes on average $20-$35 per head profit depending on market price. Volume is what makes them rich $20x40,000 head = $800,000 after expenses, at a terrible profit margin. Flip side T5R Hogs 250 head per year x $425 net per head = $106,250 profit per at very high profit margins. Comparing the 2 models is apples and oranges. Oil is a high volume low profit margin LARGE earnings model. Most restaurants pull 24%-28% profit margins but again there is no one size fits all glove as some of Big Chains pull 4%-6% Margins and rake in billions in profit on volume. On the polar opposite high end hash shacks that burn you $300+ per meal have a fraction of the fraction of the volume but huge profit margins. Most business I deal with or owners I am friends with run in the 28%-62% profit margin range. Even my own products have huge differences in the margins from product to product The prepared foods being the highest profit margin items averaging 83% while, the raw fruits and vegetables are in the 18%-20% range and the packaged meats in the 34% range Eggs hands down being the lowest at 2.7% profit margin. Real life after taxes? Is that Personal income tax? Corporate Tax? Property Taxes? Social Security tax? That varies wildly from COunty to County and State to State that there is no one size fits all glove there either. Throw in incentives and the Government picking winners and losers (the Gov is really good at picking losers )
Interesting. I thought it would generally be about 14%. I do know that most companies dealing with the Federal government have a cap on how much profit they can make...thank goodness.
True profits for my company were in the range of about 24% after costs. Personal profits for me were well over 80% but so was the personal risk factor in an ultra high risk job when I did it solo!
We used to shoot for 7% after tax and expenses on a long term average. 4% was considered poor performance. 9% and up was in bonus range.
Banks, 1%. $100 Million bank, $1 million after tax. But the owners only have about $6 million invested, so that’s $1 million on a $6 million investment, about 16% after tax. Many make more or less.
If you are in business for yourself, it is hard to tell how much you are making farming is bad, what is value of land, labor, return if you sold it all and invested it, so many different things. What you need to make if you are renting land and borrowing money is totally different than if you inherit the land and have the equipment. Know people who farm and are very happy and doing well that could double their income if the sold everything and got a 7 % return on the money invested in something else. Start a small business, what is value of the knowledge you put into it as a machinist, gunsmith, survival trainer, etc, all based on years of learning how to do something that is saleable.
We run at a 15% profit margin on general for our commercial electrical operation, with overhead and expenses covered. My last company ran at about 20% profit. My wife's company runs at around 35% profit and is labor intensive, so she benefits from a great composite ratio compared to her hourly charged rate.
Writing software .. Write it once, sell the same thing multiple times. The margin is ridiculous. Then you switch the business model over to software as a service and hook them for another 30% of original price every year and watch the money roll in. Oh and make sure the annual support fee covers your actual costs of support plus a small margin. Venture capitalist beat a path to your door step as annual cash flow looks great and they will actually help you grow your business and take it public. It's almost as good as printing money if your product is widely used. Margins of 80% are not unheard of .. oh and you can write off so much under the column of R&D.
That is exactly how I have made my living for the last 14 years. I have one program I wrote in 1995 that still generates maintenance income every month. If a program is unique enough, it can have a 20+ year lifespan.
12% profit unless it is a giant then the profits usually run 3%, that has been my experience. From the article in the OP, it shows that most people really do not know much about companies and profits. Also one thing to remember if a company shows too much profit, they will have to pay taxes on it so fiscal year end, there is usually a bonus/dividend or spending spree happens to low the profit so less taxes need to be paid.
A kilo of cocaine costs around $2500, that's 1000 grams at $75 for stepped-on coke, stepped on so double $15000.00 or a proffit of 600%, so if you want you children to grow up to be wealthy, forget this $15.00 an hour frenchfry chef crap.
