In reference to "markup" mentioned above, let me clear up a misconception about markup as it is used in GAAP (Generally Accepted Accounting Principles) reporting. Follow the example closely and I'll show you why a $40 cost marked up 50% isn't $60 as you stated.
If I take $100 and mark it up 10%, what does that equal? $110, right? WRONG!
Why is this? If I take $110 and mark it DOWN 10%, what is my number? It's actually $99.00. For a company's financial statements to work properly and for all the numbers to add up correctly, this can't occur. So, then, what is markup?
(Sell Price - Cost) / Sell price = Margin or ($110-$100)/$110=9.09%
Or, to calculate margin you can divide by a reciprocal. For a true 10% (or 10 out of 100), divide by .9 (or 90 out of 100). For example, $100/.9=$111.11. This is a true 10% markup.
That means that a 50% markup DOUBLES the price. It is mathematically impossible to mark something up 100% because that would mean the price was zero and you can't divide by zero. That makes sense in the financial world at least because companies don't get their products free and there is always an associated cost -- i.e. cost can't ever really be truly zero.
When I worked retail many, many, many moons ago, margins on PC related software (MSRP) were right at 50% for games on computers. We didn't sell console, admittedly, so I don't have a solid frame of reference. Many have said that console games are wholesale at 20% below MSRP. I find it hard to believe that it is this low but maybe so. If anyone who truly has insight into the wholesale costs of the average console game, please let us know...
I hate trolls.
Systems I currently own: 360, PS3, Wii, DS Lite (2)
Systems I've owned: PS2, PS1, Dreamcast, Saturn, 3DO, Genesis, Gamecube, N64, SNES, NES, GBA, GB, C64, Amiga, Atari 2600 and 5200, Sega Game Gear, Vectrex, Intellivision, Pong. Yes, Pong.
