Silly business question

[Littlefella68]

Daft question here. Just putting this out there. May be obvious to the fmttm hive mind

Is it better to buy @£1 sell for £2 = £1 profit

Or buy for £5 sell for £6 =£1

 

[NorthumberlandBoro]

No silly questions, grasshopper, just silly answers.

 

[NorthumberlandBoro]

I would say always better to get the same return for the lowest outlay .

 

[NorthumberlandBoro]

By spending the £1 you get a 100% return and still £4 to invest further.

 

[Hap]

In terms of the potential for either risk, or outlay, alone, it's option one all day long.
better still, cost £5, sell £10, Rodney.

 

[Littlefella68]

Thanks for confirming what I though. Cheers

 

[Boro_Interlinked]

not enough info really

if it takes you 1 week to shift an item you bought for 1 quid - say because of the quality doesn't appeal to most, vs the more expensive item that people like it and you can shift 1 per hour, then obv the more expensive item wins. So you have to factor in rate of sale for a better comparison .

 

[Hap]

Margins differ radically in different industies. Operating cost, wastage, cost of entry...

High margins are optimal imho

 

[BoroFur]

An old business term, turnover is vanity but profit is sanity.

 

[NorthumberlandBoro]

Actually, if you are on purely sales commission, go for option 2!

 

[Ingleby_Flash]

If long term you plan to sell this pound making business a potential buyer may be more interested in the model that makes the higher margin. Although they will still only pay a multiple of EBIT, but you might get a slightly higher multiple.