Now if you're asking what I think a "fair" amount of profit is in terms of "How much profit can you make before you get to the point that you're taking advantage of someone?", I would say that there's a certain margin of ambivalence inherent to the answer. Still I think that in general, once you get up around or above 20% profit - PURE PROFIT - on pretty much any product or service that you're providing, in all likelihood you've got some larceny in your heart.

 

Disagree.

 

Profit is a function of price, cost, and expenses.

 

Price is a function of value.

 

Price is not solely a function of cost.

 

If I have a product that has high value which leads to people paying a high price for it and I control my costs and expenses why should I change my price because some think X% is too high? If you think it's too high then you do not see value in my product. I have two choices at that point. If a lot of people share your feelings then I lower my price to get a better value equation OR I don't worry about you and your feelings and keep my price where it is and find those that see the value.

Disagree.

 

Profit is a function of price, cost, and expenses.

 

Price is a function of value.

 

Price is not solely a function of cost.

 

If I have a product that has high value which leads to people paying a high price for it and I control my costs and expenses why should I change my price because some think X% is too high? If you think it's too high then you do not see value in my product. I have two choices at that point. If a lot of people share your feelings then I lower my price to get a better value equation OR I don't worry about you and your feelings and keep my price where it is and find those that see the value.

 

Good post.

I agree, no limit to what you should be able to make. Sad part is, if you make a lot, than some folks think you have to give it back to those that don't.

Hard to put a true % on this due to risk/reward of different businesses.

 

One argument I have with my wife is; (I hope this does not hijack the thread) are pro players worth what they get paid? Consider them a business. They have a value for what they do. IMO, They are worth every penny if someone pays them for their services. If the owner does not put a successful product out to his consumer, than his business may suffer--than payrolls go down. Until that happens LeBron inc. is worth every % he earns.

Your example is why I lean towards "no limit." Your market and your skills and your ability to run your business will ultimately determine your profit. Software companies look at a much higher gross and net margin. Different product. Different expenses. Oil will be very profitable because of demand around the world vs supply.

 

The problem here is that not every price and every profit and every cost is based on supply and demand. Oil is the perfect example. Plenty of oil right now, and plenty of demand, but not more demand than supply. Price per barrel is lower now that it was when we paid these gas prices before.

 

I also think there are more questions to ask than simply profit margin. What kind of responsibility to you have to the environment? What kind or responsibility do you have to your workers? What is your responsibility to your community? What is your responsibility to your country? Is everything purely economics, and can there be other factors outside of profit margin.

The problem here is that not every price and every profit and every cost is based on supply and demand. Oil is the perfect example. Plenty of oil right now, and plenty of demand, but not more demand than supply.

 

Define "plenty of oil." What type of oil? Tar sands has lots of oil but it's very expensive to extract. Cheap oil is not plentiful as it relates to demand as far as I know. It's not Saudi Arabia. IF they had all of the excess that many claim they would not be keeping it to the side. Why? We all agree that the oil price increase ultimately led to the economic plight we're in now. Price per barrel plummeted once the recession started. Why would SA let that plummet happen again? They wouldn't. If they had extra supply they would be putting it into the market just enough to keep oil prices at a level that makes them profit for a long time. To believe they are sitting by on extra oil defies financial logic unless you believe they are simply looking short-term. I do not.

Define "plenty of oil." What type of oil? Tar sands has lots of oil but it's very expensive to extract. Cheap oil is not plentiful as it relates to demand as far as I know. It's not Saudi Arabia. IF they had all of the excess that many claim they would not be keeping it to the side. Why? We all agree that the oil price increase ultimately led to the economic plight we're in now. Price per barrel plummeted once the recession started. Why would SA let that plummet happen again? They wouldn't. If they had extra supply they would be putting it into the market just enough to keep oil prices at a level that makes them profit for a long time. To believe they are sitting by on extra oil defies financial logic unless you believe they are simply looking short-term. I do not.

 

There is not currently a direct correlation in barrel prices and gasoline prices.

Are you talking about the $11 BILLION profit for Exxon in the first quarter? And remember, we give them tax breaks too!

Are you talking about the $11 BILLION profit for Exxon in the first quarter? And remember, we give them tax breaks too!

 

I agree, that's not much of a profit for that size company. If I were a stockholder I'd demand more return.

I agree, that's not much of a profit for that size company. If I were a stockholder I'd demand more return.

I think it's too much! Oil companies made close to 1 BILLION in profit per day in the first quarter, why the heck are they getting tax breaks? Exxon's profits increased 46%!

Are you talking about the $11 BILLION profit for Exxon in the first quarter? And remember, we give them tax breaks too!

 

I think it's too much! Oil companies made close to 1 BILLION in profit per day in the first quarter, why the heck are they getting tax breaks? Exxon's profits increased 46%!

 

I get the desire for dramatic effect, but you might want to check your math. Somethin' ain't cipherin' right, there.

I agree, that's not much of a profit for that size company. If I were a stockholder I'd demand more return.

 

Considering that your pension fund might very well be invested heavily in Exxon stock, I'd demand more, too. A third of Exxon is owned by institutions like pension funds.

I think it's too much! Oil companies made close to 1 BILLION in profit per day in the first quarter, why the heck are they getting tax breaks? Exxon's profits increased 46%!

 

Exxon paid more taxes to the US in 2010 then it made profit from sales in the US.

Exxon paid more taxes to the US in 2010 then it made profit from sales in the US.

 

you mean "0"

Exxon paid more taxes to the US in 2010 then it made profit from sales in the US.

 

you mean "0"

you mean "0"

 

You mean over 7 billion, not including payroll taxes which is a different animal completely.