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Old 12-30-2021, 03:10 PM
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FreddieFerric FreddieFerric is offline
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Default How Low Can A Profit Margin Actually Be...???

Here's the deal. I bought a 65" Samsung Q60A QLED last week to put in our bedroom. (Nothing wrong with the 50" plasma I already had in there, but wife wanted a bigger picture)

We finally unboxed it yesterday and I was looking at it this morning and noticed a spot of dirt or something on the screen under the glass. It cannot be removed. Now it's like a zit in the middle of your nose. It's impossible to not notice.

I drove over to Best Buy this morning to chat with them about it. I know my options are to return the TV for an exchange or a refund, but I wanted to see if they would discount the TV enough to convince me to just keep it.

After talking with one of the supposed managers (who decidedly lacked interpersonal skills) they offered to sell the TV to me "at cost." I said, OK, what's cost? Answer was $838.00. Mind you I paid $849.00 for it. So we're talking an $11.00 difference.

I'll be returning the TV tomorrow. But the bigger question in my head is can they really be selling TV's like this for such a miniscule margin. How is it possible they could even stay in business that way?

I'm beginning to suspect that their dealer invoice is a lot like in the car business where dealer invoice doesn't come close to telling the real story.

Anyone have the inside juice on this?
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Old 12-30-2021, 06:45 PM
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Interesting question. I looked at their latest financials (fiscal year 2021). Their operating income was 5% and net income was 3.8%. Those are pretty slim margins, and I’ve heard before that they make less profit on items like TVs and more on things like extended warranties, services, accessories, etc.
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D'Agostino Momentum S250 MxV & HD pre; Linn Klimax Organik DSM, SonicTransporter, EtherRegen; Acoustic Signature Typhoon Neo, Koetsu RSP, Boulder 1108; Sf Il Cremonese; Shunyata Everest, Altaira, Sigma & Alpha v2
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  #3  
Old 12-30-2021, 06:57 PM
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Quote:
Originally Posted by FreddieFerric View Post
Here's the deal. I bought a 65" Samsung Q60A QLED last week to put in our bedroom. (Nothing wrong with the 50" plasma I already had in there, but wife wanted a bigger picture)

We finally unboxed it yesterday and I was looking at it this morning and noticed a spot of dirt or something on the screen under the glass. It cannot be removed. Now it's like a zit in the middle of your nose. It's impossible to not notice.

I drove over to Best Buy this morning to chat with them about it. I know my options are to return the TV for an exchange or a refund, but I wanted to see if they would discount the TV enough to convince me to just keep it.

After talking with one of the supposed managers (who decidedly lacked interpersonal skills) they offered to sell the TV to me "at cost." I said, OK, what's cost? Answer was $838.00. Mind you I paid $849.00 for it. So we're talking an $11.00 difference.

I'll be returning the TV tomorrow. But the bigger question in my head is can they really be selling TV's like this for such a miniscule margin. How is it possible they could even stay in business that way?

I'm beginning to suspect that their dealer invoice is a lot like in the car business where dealer invoice doesn't come close to telling the real story.

Anyone have the inside juice on this?
They are lying; I am a Sony dealer, I wouldn’t turn on my computer for $11.00
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MX136, MC1.2KW(10) MC2KW(2), MCD1100, MS750(2) MVP881, C1000C/P/T, MPC1500, HT-2 SUBS(2) HT3F(2) WS350(2) XRT2K, XCS2K, XR27(2) XCS350(2) JL GOTHAM v2 SUBS(2) SILENZIO MUSIC SERVER, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" MOTORIZED SCREEN, CINEMA-TECH SEATING, WW PLATINUM CABLES
Reference System: ACCUPHASE A300 AMPS, C3900 PRE-AMP, DP1000 CD/SACD TRANSPORT, DC1000 DIGITAL PROCESSOR, DG-68 DIGITAL EQUALIZER, T1200 FM STEREO TUNER, PS1230 POWER SUPPLY, HRS-SXR CUSTOM RACK w/ M3X SHELVES, TAD REFERENCE ONE MK2 LOUDSPEAKERS, WW PLATINUM CABLES
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MX150, MC501(2) MC1.2KW(10) MC2301(2) MR88, MVP881, MCD1100, MDA1000, C1000C/P/T, MPC1500, ESOTERIC K-01X 30th ANNIVERSARY (BLACK) SACD/CD PLAYER, G02-X CLOCK, HT3F(2) XRT2K, XCS2K, XR27(2) JL GOTHAM v2 SUBS(2) JL FATHOM F113v2 SUBS(4) SOUND ANCHOR STANDS(2) KALEIDESCAPE STRATO & TERRA SERVERS 80-TB, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" SCREEN, SONUS FABER STRADIVARI, SILENZIO MUSIC SERVER, FORTRESS SEATING, WW PLATINUM CABLES
Analog Rig: CLEARAUDIO INNOVATION WOOD, UNIVERSAL ARM w/ Da VINCI' CART, 2nd UNIVERSAL ARM w/ GOLDFINGER STATEMENT CART, HRS-MXR REFERENCE RACK-GLOSS BLACK w/ M3X SHELVES, AESTHETIX RHEA SIG PHONO-PRE, BRYSTON BHA-1 HEADPHONE AMP, WW PLATINUM CABLES
Reference System: BURMESTER 911MK3 AMP(3), 088 PRE-AMP, 089 CD PLAYER, 100 PHONO PRE-AMP, 948 POWER CONDITIONER, ACCUPHASE DG-68 VOICING EQUALIZER, AVID ACUTUS REFERENCE SP TT, GRAHAM PHANTOM II SUPREME ARM, BENZ MICRO LP-S CART, GRANDIOSO P1X/D1X STACK, G1X RUBIDIUM MASTER CLOCK, N05 NETWORK PLAYER, SILENZIO MUSIC SERVER, HRS-SXR CUSTOM RACK w/ M3X SHELVES, SONUS FABER AIDA SPEAKERS, JL FATHOM F113v2 SUBS(2) SOUND ANCHOR STANDS(2) WW PLATINUM CABLES

Library System: GRANDIOSO M1 MONOBLOCK AMPS, C1 LINESTAGE PRE-AMP, K1X CD/SACD PLAYER, G1 MASTER RUBIDIUM CLOCK, E02 PHONO-PRE, SILENZIO MUSIC SERVER, AERIAL ACOUSTICS 20T V2, AERIAL SW12 SUBS(2), CANTON REF K1’s, VPI HRX TT w/ SDS POWER SUPPLY, ORTOFON CADENZA BLACK CART, KLAUDIO RCM, SHUNYATA DENALI 6000/S v2, SHUNYATA OMEGA QR’s, WW PLATINUM CABLES
Esoteric/Bryston System: ESOTERIC C02-X PRE-AMP, P-02X TRANSPORT, D02-X DAC, G02-X CLOCK, BRYSTON 28B3 CUBED MONOBLOCK AMPS(4), BRYSTON BHA-1 HEADPHONE AMP, SHUNYATA DENALI 6000/S v2(2) EVEREST 8000 POWER CONDITIONER(2) ALTAIRA CG & SG HUBS, AMR-DP777-SE DAC, SILENZIO MUSIC SERVER, TAD REFERENCE ONE MK2 LOUDSPEAKERS, QUADRASPIRE RACK, WW PLATINUM CABLES
Accuphase/Canton System: ACCUPHASE E800 INTEGRATED, DP570 CD/SACD PLAYER, T1200 FM STEREO TUNER, DG-68 VOICING EQUALIZER, PS530 POWER SUPPLY, CANTON REF K3’s, CANTON REF K5’s, SILENZIO MUSIC SERVER, HRS MXR REFERENCE MAHOGHANY RACK w/ M3X2 SHELVES, WW GOLD CABLES
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  #4  
Old 12-30-2021, 07:50 PM
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Default How Low Can A Profit Margin Actually Be...???

Quote:
Originally Posted by Masterlu View Post
They are lying; I am a Sony dealer, I wouldn’t turn on my computer for $11.00


Yeah, but I’m betting your smart enough to make a better margin than Best Buy. On the other hand, of course they’re lying[emoji41].
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D'Agostino Momentum S250 MxV & HD pre; Linn Klimax Organik DSM, SonicTransporter, EtherRegen; Acoustic Signature Typhoon Neo, Koetsu RSP, Boulder 1108; Sf Il Cremonese; Shunyata Everest, Altaira, Sigma & Alpha v2
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  #5  
Old 12-30-2021, 08:27 PM
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Quote:
Originally Posted by Antonmb View Post
Interesting question. I looked at their latest financials (fiscal year 2021). Their operating income was 5% and net income was 3.8%. Those are pretty slim margins, and I’ve heard before that they make less profit on items like TVs and more on things like extended warranties, services, accessories, etc.
Quote:
Originally Posted by Masterlu View Post
They are lying; I am a Sony dealer, I wouldn’t turn on my computer for $11.00
Quote:
Originally Posted by Antonmb View Post
Yeah, but I’m betting your smart enough to make a better margin than Best Buy. On the other hand, of course they’re lying[emoji41].
Agreed. They're being less than forthright about their cost.

OTOH, Tony's review of the financials has me a bit concerned. I have ~$13,000.00 parked with Magnolia for the MC1502 that's on order and an arrival date sometime in March.

With margins that slim I'm sure they need a stellar Holiday Season to keep them in the black. If that didn't happen this year what's to keep them out of Chapter 11. In that scenario I become an unsecured creditor and it's pretty much Adios to my money and amp.

More sleepless nights ahead.
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McIntosh MA8000; McIntosh MC1502; Canton Vento Reference 1 DC; E.A.T. E-Flat; Soundsmith Paua Mk II; Technics SL 1210 MK5; Audio Technica AT-150 MLX; Tascam BR-20; Teac X1000R; Pioneer RT-707; Oppo UDP 205; Denon DCD A-100; HP All-In-One Touchscreen Server; JRiver MC 28; Woo Audio WA6; Shure SRH 1840; SVS SB 1000; Jolida 502BRC; Jolida JD9; VPI 16.5 RCM; Wireworld Oasis 8 Speaker Cables; Audoquest Columbia 72 DBS IC's; Panamax PM-5400 (source components only)
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  #6  
Old 12-30-2021, 08:56 PM
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2022 is going to be down right brutal for brick & mortar retailers. I expect about 15~20% of them to not make it through the year.
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FLORIDA
MX136, MC1.2KW(10) MC2KW(2), MCD1100, MS750(2) MVP881, C1000C/P/T, MPC1500, HT-2 SUBS(2) HT3F(2) WS350(2) XRT2K, XCS2K, XR27(2) XCS350(2) JL GOTHAM v2 SUBS(2) SILENZIO MUSIC SERVER, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" MOTORIZED SCREEN, CINEMA-TECH SEATING, WW PLATINUM CABLES
Reference System: ACCUPHASE A300 AMPS, C3900 PRE-AMP, DP1000 CD/SACD TRANSPORT, DC1000 DIGITAL PROCESSOR, DG-68 DIGITAL EQUALIZER, T1200 FM STEREO TUNER, PS1230 POWER SUPPLY, HRS-SXR CUSTOM RACK w/ M3X SHELVES, TAD REFERENCE ONE MK2 LOUDSPEAKERS, WW PLATINUM CABLES
CAPE COD

MX150, MC501(2) MC1.2KW(10) MC2301(2) MR88, MVP881, MCD1100, MDA1000, C1000C/P/T, MPC1500, ESOTERIC K-01X 30th ANNIVERSARY (BLACK) SACD/CD PLAYER, G02-X CLOCK, HT3F(2) XRT2K, XCS2K, XR27(2) JL GOTHAM v2 SUBS(2) JL FATHOM F113v2 SUBS(4) SOUND ANCHOR STANDS(2) KALEIDESCAPE STRATO & TERRA SERVERS 80-TB, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" SCREEN, SONUS FABER STRADIVARI, SILENZIO MUSIC SERVER, FORTRESS SEATING, WW PLATINUM CABLES
Analog Rig: CLEARAUDIO INNOVATION WOOD, UNIVERSAL ARM w/ Da VINCI' CART, 2nd UNIVERSAL ARM w/ GOLDFINGER STATEMENT CART, HRS-MXR REFERENCE RACK-GLOSS BLACK w/ M3X SHELVES, AESTHETIX RHEA SIG PHONO-PRE, BRYSTON BHA-1 HEADPHONE AMP, WW PLATINUM CABLES
Reference System: BURMESTER 911MK3 AMP(3), 088 PRE-AMP, 089 CD PLAYER, 100 PHONO PRE-AMP, 948 POWER CONDITIONER, ACCUPHASE DG-68 VOICING EQUALIZER, AVID ACUTUS REFERENCE SP TT, GRAHAM PHANTOM II SUPREME ARM, BENZ MICRO LP-S CART, GRANDIOSO P1X/D1X STACK, G1X RUBIDIUM MASTER CLOCK, N05 NETWORK PLAYER, SILENZIO MUSIC SERVER, HRS-SXR CUSTOM RACK w/ M3X SHELVES, SONUS FABER AIDA SPEAKERS, JL FATHOM F113v2 SUBS(2) SOUND ANCHOR STANDS(2) WW PLATINUM CABLES

Library System: GRANDIOSO M1 MONOBLOCK AMPS, C1 LINESTAGE PRE-AMP, K1X CD/SACD PLAYER, G1 MASTER RUBIDIUM CLOCK, E02 PHONO-PRE, SILENZIO MUSIC SERVER, AERIAL ACOUSTICS 20T V2, AERIAL SW12 SUBS(2), CANTON REF K1’s, VPI HRX TT w/ SDS POWER SUPPLY, ORTOFON CADENZA BLACK CART, KLAUDIO RCM, SHUNYATA DENALI 6000/S v2, SHUNYATA OMEGA QR’s, WW PLATINUM CABLES
Esoteric/Bryston System: ESOTERIC C02-X PRE-AMP, P-02X TRANSPORT, D02-X DAC, G02-X CLOCK, BRYSTON 28B3 CUBED MONOBLOCK AMPS(4), BRYSTON BHA-1 HEADPHONE AMP, SHUNYATA DENALI 6000/S v2(2) EVEREST 8000 POWER CONDITIONER(2) ALTAIRA CG & SG HUBS, AMR-DP777-SE DAC, SILENZIO MUSIC SERVER, TAD REFERENCE ONE MK2 LOUDSPEAKERS, QUADRASPIRE RACK, WW PLATINUM CABLES
Accuphase/Canton System: ACCUPHASE E800 INTEGRATED, DP570 CD/SACD PLAYER, T1200 FM STEREO TUNER, DG-68 VOICING EQUALIZER, PS530 POWER SUPPLY, CANTON REF K3’s, CANTON REF K5’s, SILENZIO MUSIC SERVER, HRS MXR REFERENCE MAHOGHANY RACK w/ M3X2 SHELVES, WW GOLD CABLES
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  #7  
Old 12-30-2021, 09:15 PM
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Keep in mind cheaper/loss leader stuff will always be thinner margins - especially if discounted or "on sale" around the holidays.


Sub $1K TVs are notorious for low margins. But add in a few HDMI cables (even the "cheap" ones), an extended warranty, mount, and whatever junk you throw in your cart while in line and hey, that $11 just turned into $200.



Back in my retail days, I practically had to be bribed to show up on Black Friday. But... I'd gleefully put in a 16-hour day on Xmas Eve!
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Old 12-30-2021, 09:22 PM
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Quote:
Originally Posted by Masterlu View Post
2022 is going to be down right brutal for brick & mortar retailers. I expect about 15~20% of them to not make it through the year.
My preferance would have been to do business with you on the amp Ivan, but geography is a bit of a problem.
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McIntosh MA8000; McIntosh MC1502; Canton Vento Reference 1 DC; E.A.T. E-Flat; Soundsmith Paua Mk II; Technics SL 1210 MK5; Audio Technica AT-150 MLX; Tascam BR-20; Teac X1000R; Pioneer RT-707; Oppo UDP 205; Denon DCD A-100; HP All-In-One Touchscreen Server; JRiver MC 28; Woo Audio WA6; Shure SRH 1840; SVS SB 1000; Jolida 502BRC; Jolida JD9; VPI 16.5 RCM; Wireworld Oasis 8 Speaker Cables; Audoquest Columbia 72 DBS IC's; Panamax PM-5400 (source components only)
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  #9  
Old 12-30-2021, 10:11 PM
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Quote:
Originally Posted by FreddieFerric View Post
My preferance would have been to do business with you on the amp Ivan, but geography is a bit of a problem.
No problem
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FLORIDA
MX136, MC1.2KW(10) MC2KW(2), MCD1100, MS750(2) MVP881, C1000C/P/T, MPC1500, HT-2 SUBS(2) HT3F(2) WS350(2) XRT2K, XCS2K, XR27(2) XCS350(2) JL GOTHAM v2 SUBS(2) SILENZIO MUSIC SERVER, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" MOTORIZED SCREEN, CINEMA-TECH SEATING, WW PLATINUM CABLES
Reference System: ACCUPHASE A300 AMPS, C3900 PRE-AMP, DP1000 CD/SACD TRANSPORT, DC1000 DIGITAL PROCESSOR, DG-68 DIGITAL EQUALIZER, T1200 FM STEREO TUNER, PS1230 POWER SUPPLY, HRS-SXR CUSTOM RACK w/ M3X SHELVES, TAD REFERENCE ONE MK2 LOUDSPEAKERS, WW PLATINUM CABLES
CAPE COD

MX150, MC501(2) MC1.2KW(10) MC2301(2) MR88, MVP881, MCD1100, MDA1000, C1000C/P/T, MPC1500, ESOTERIC K-01X 30th ANNIVERSARY (BLACK) SACD/CD PLAYER, G02-X CLOCK, HT3F(2) XRT2K, XCS2K, XR27(2) JL GOTHAM v2 SUBS(2) JL FATHOM F113v2 SUBS(4) SOUND ANCHOR STANDS(2) KALEIDESCAPE STRATO & TERRA SERVERS 80-TB, LUMAGEN RADIANCE SCALER, SONY VPH-G90U 4K PROJECTOR, STEWART 120" SCREEN, SONUS FABER STRADIVARI, SILENZIO MUSIC SERVER, FORTRESS SEATING, WW PLATINUM CABLES
Analog Rig: CLEARAUDIO INNOVATION WOOD, UNIVERSAL ARM w/ Da VINCI' CART, 2nd UNIVERSAL ARM w/ GOLDFINGER STATEMENT CART, HRS-MXR REFERENCE RACK-GLOSS BLACK w/ M3X SHELVES, AESTHETIX RHEA SIG PHONO-PRE, BRYSTON BHA-1 HEADPHONE AMP, WW PLATINUM CABLES
Reference System: BURMESTER 911MK3 AMP(3), 088 PRE-AMP, 089 CD PLAYER, 100 PHONO PRE-AMP, 948 POWER CONDITIONER, ACCUPHASE DG-68 VOICING EQUALIZER, AVID ACUTUS REFERENCE SP TT, GRAHAM PHANTOM II SUPREME ARM, BENZ MICRO LP-S CART, GRANDIOSO P1X/D1X STACK, G1X RUBIDIUM MASTER CLOCK, N05 NETWORK PLAYER, SILENZIO MUSIC SERVER, HRS-SXR CUSTOM RACK w/ M3X SHELVES, SONUS FABER AIDA SPEAKERS, JL FATHOM F113v2 SUBS(2) SOUND ANCHOR STANDS(2) WW PLATINUM CABLES

Library System: GRANDIOSO M1 MONOBLOCK AMPS, C1 LINESTAGE PRE-AMP, K1X CD/SACD PLAYER, G1 MASTER RUBIDIUM CLOCK, E02 PHONO-PRE, SILENZIO MUSIC SERVER, AERIAL ACOUSTICS 20T V2, AERIAL SW12 SUBS(2), CANTON REF K1’s, VPI HRX TT w/ SDS POWER SUPPLY, ORTOFON CADENZA BLACK CART, KLAUDIO RCM, SHUNYATA DENALI 6000/S v2, SHUNYATA OMEGA QR’s, WW PLATINUM CABLES
Esoteric/Bryston System: ESOTERIC C02-X PRE-AMP, P-02X TRANSPORT, D02-X DAC, G02-X CLOCK, BRYSTON 28B3 CUBED MONOBLOCK AMPS(4), BRYSTON BHA-1 HEADPHONE AMP, SHUNYATA DENALI 6000/S v2(2) EVEREST 8000 POWER CONDITIONER(2) ALTAIRA CG & SG HUBS, AMR-DP777-SE DAC, SILENZIO MUSIC SERVER, TAD REFERENCE ONE MK2 LOUDSPEAKERS, QUADRASPIRE RACK, WW PLATINUM CABLES
Accuphase/Canton System: ACCUPHASE E800 INTEGRATED, DP570 CD/SACD PLAYER, T1200 FM STEREO TUNER, DG-68 VOICING EQUALIZER, PS530 POWER SUPPLY, CANTON REF K3’s, CANTON REF K5’s, SILENZIO MUSIC SERVER, HRS MXR REFERENCE MAHOGHANY RACK w/ M3X2 SHELVES, WW GOLD CABLES
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  #10  
Old 12-31-2021, 07:45 AM
SCAudiophile SCAudiophile is offline
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E's and other comments are spot on,...low margins on items are offset (or can be) by other items in your total purchase. Even then, if you only buy the low margin TV or other gizmo whose price is designed to get you in the door, how many of those are they selling? Many times it is large numbers,...

Remember WinZip? It's pricing model is legendary,...started out at $15-$25 if memory serves and is not too far north of that even today. Low margin however, the volume is HUGE and people keep coming back.

What would you rather sell,...huge volume and low margin, or higher margin and far lower volumes? The choice is a NO-brainer (assuming margins in the example ensure sustainability of both offerings).

Besides, I believe "the truth will generally out...", many items with overly/artificially high margins are generally exposed as having them over time. Consumers become less willing to pay them and demand higher discounts (and also shop for alternatives) particularly when the actual value added by those (or sometimes little value) who take those higher profits just because they are selling those items, not because of value delivered. This is particularly true when educated consumers require little except someone to take an order and give a competitive price.
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