why are low costs products so profitable?
2006-10-31 07:18:40 · 4 answers · asked by Alia M 1 in Business & Finance ➔ Small Business
Low cost products aren't necessarily profitable. What makes it profitable is that it fulfills a need, especially for things that are needed for human subsistence or to live in normal society. Many low cost products serve this purpose, which may make them appear to be profitable because they're low cost. Also, selling lots of different low costs products using the same supply chain is profitable(I think you might be referring to Walmart)... it's called 'economies of scope' when you sell many different products, utilizing the amount of space you have to sell as many products as you can to increase profits(example: a gas station doesn't just sell gas).
2006-10-31 07:27:37 · answer #1 · answered by Nep 6 · 0⤊ 0⤋
Lower cost items can be sold a low profit margin but sold in higher quantities thus making a good profit. Many items sold at low cost are "cheap", too, meaning disposable, poor quality, or common items which are readily replaced by the consumer.
2006-10-31 15:23:20 · answer #2 · answered by Forgot How 2 Show Him 2 · 0⤊ 0⤋
not all low cost items profitable.
2006-10-31 15:22:55 · answer #3 · answered by Scott 6 · 0⤊ 0⤋
It can only be profitable if your expenses are very low.
2006-10-31 15:22:37 · answer #4 · answered by romulusnr 5 · 0⤊ 0⤋