GW Financial Myths dispelled Part I

This post comes from a conversation in BOLS where I read people raging or defending GW prices. The intent of the post is by no means to defend or attack a pricing policy, merely to explain it, as quite usually unsubstantiated claims are made.

All of GW's operating policy is easily verifiable, if you´ve got any interest in learning the truth read the post to the end, if you just want to troll, troll away :)

From Independent Audited Consolidated Income Statement, GW Financial Report 2014/2015, page 34

1. Revenue: 119,132 Million (That´s the gross amount of money that enters the company from selling their product)
2. Cost of sales also known as COGS: 36,988 Million (That´s the cost directly associated with selling their product, so what the miniature really costs GW to produce)

So it´s easy to verify the margin at which GW sells their average mini: 322%

That´s only part one though.

Aside from the costs directly associated with creating an item, there are indirect costs or overheads that need to be incurred in order to be able to deliver that mini to the public. Those costs include: salaries of salespeople, transport, websites, leases of stores and a huuuuge etc.

So add in Operating expenses of 67,207 million

The operating profit of GW is therefore 16,477 million for 119,132 million worth of sales.

That means that they actually have a 13,8% profit in each of their minis sold, which is quite average for the consumer goods industry.

And the last point: They can afford to return items with no problem because the actual production cost of the item is quite small, but the costs necessary to deliver it to you are high, so it´s better to ensure customer satisfaction and a repeated purchase from a business standpoint in a niche industry with high word of mouth component than to earn 10 cents on a dollar.

Biz 101: Never confuse margin with profit.

Grieux out.