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Profit Margins
Profit margins are a little tricky because many people do not recognize that profit is always less when you are starting out. You are unable to take advantage of buying in bulk because you do not have established customers. Also, you are not able to take advantage of mass production.
To illustrate the advantages of mass production, consider this example: A bar of soap retails for $4.00 and wholesales for $2.00. The typical net profit on a bar of soap sold wholesale is $1.00 per bar. If you are just starting out you will likely make 50 bars in 4 hours. If you sell all of this soap, your work pays you about $15.25/hour. On the other hand, it is not uncommon for an established business staffed by one person to make 2,500 bars in about 30 hours. This pays you about $124.35/hour.
This is a considerable difference...but a realistic example on how hard work and mass production increases profits.
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