Linked by Thom Holwerda on Mon 22nd Aug 2011 21:19 UTC
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RE[4]: Bummed to see this now
by M.Onty on Tue 23rd Aug 2011 14:13
in reply to "RE[3]: Bummed to see this now"
The single largest cost for Nike at one stage was sponsorship of Michael Jordan. He was paid more than the entire combined wages bill of all the employees in the manufacturing division.
I feel slightly queesy now, thank you; as I hope Mr Jordan when he was informated of that fun fact.
P.S. Can we have a source if possible. You have my interest.
Edited 2011-08-23 14:14 UTC
RE[4]: Bummed to see this now
by kristoph on Wed 24th Aug 2011 18:54
in reply to "RE[3]: Bummed to see this now"
Ok, first of all, you said 10-20x previously and now, in your example, it's 4x which is more realistic cost of manufacturing.
However, that's totally irrelevant, because someone has to actually design the thing, test it, have it built, manage QA, package it, ship it, market it, ,sell it, support it (and I've not even mentioned the software involved).
Just saying 'x costs 1/4 to build and so it should be cheaper' is meaningless because 'building' something ignores all the costs of getting the thing to a consumer.
RE[4]: Bummed to see this now
by viton on Wed 24th Aug 2011 20:25
in reply to "RE[3]: Bummed to see this now"




Member since:
2007-01-13
You are completely confusing net profit with gross margins.
No manufacturing company ever operates on 5% gross margins.
If you think HP is paying $475 per tablet to the Chinese manufacturer you are hallucinating.
eg:
tablet per unit manufacturing cost:$50
trade price $100 (paid by HP)
wholesale price $400 (paid by computer store)
retail price $500 (paid by consumer)
At each stage about 10% net profit is made after costs.
BTW designer clothes and accessories typically sell for ~100x the manufacturing cost. Designer brand polo shirts cost $~0.8 to make in China. Top designer brand jeans $~2. Most of the retail cost is due to sponsorship and marketing.
The single largest cost for Nike at one stage was sponsorship of Michael Jordan. He was paid more than the entire combined wages bill of all the employees in the manufacturing division.