Quote:
Originally Posted by soilwork
If you lose $1 per unit sold,
- when you sell 100 units, you will lose 100$.
- when you sell 10000 units, you will lose 10000$.
As long as you sell below cost, selling more (volume) will harm you more.
|
That's not really true. As volumes go up the cost to manufacture goes down. Buying components in bulk is cheaper, and contract manufacturers will bid more aggressively on larger contracts that keep more of their workers employed for longer periods, even if at a reduced profit. Cash flow stability and predictability have real value that suppliers are willing to compete for.
Of course there is a threshold where any additional increase in volume does not net a reciprocal decrease in manufacturing cost.