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			  | Alchenar ->  RE: I hope Matrix doesnt make us use STEAM to buy games in the future  (12/6/2013 3:37:21 PM) |  
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 quote:
 ORIGINAL:  dutchman55555
 
 
 
 quote:
 ORIGINAL:  Alchenar
 
 
 
 quote:
 ORIGINAL:  dutchman55555
 
 "Profit margin is the percentage of selling price that turned into profit." (Profit margin) Units sold doesn't enter into it, bro.
 
 
 No, it's Net Profit over Revenue.  Guess what happens to the number needed for net profit when revenue goes up but costs remain static (because virtually all of the cost of a digital product is incurred in development, assuming you aren't spending on marketing)?
 
 
 NPM = NP/R, where NP = R - C
 
 Let's say I'm selling something at $25K a unit, with a fixed cost of $50K (development, digital distribution afterwards).
 
 4 units NP $100K - $50K = $50K
 NPM = 50% profit
 
 6 units NP $150K - $50K = $100K
 NPM = 75% profit
 
 8 units NP $200K - $50K = $150K
 NPM = 100% profit
 
 As your units sold (shipped) goes up your profit margin also goes up. To quote someone,
 
 
 quote:
 ORIGINAL:  Alchenar
 
 I don't think you know how profit margins work. (hint: the more units you ship, the lower your unit price needs to be to make a profit)
 
 The more units you ship, the lower your unit price needs to be to make the exact same profit . Leave the unit price where it is and your profit increases.
 
 
 
 
 
 I don't know what your point is anymore.  You haven't disagreed with me.  The point is that Valve taking a cut doesn't have anything to do with profit margins.
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