Hi Jim,

Yes and no... ;-)

In retail it's customary to "Keystone", which basically means to sell for twice your cost, so in most retail scenarios the cost is 50% of the list price. That is for general merchandise, clothing, etc.; for electronics the margin unfortunately is much lower, but dealers get incentives from their manufacturers and distributors to offset the very low margin, so when a sleazy car dealer tells you his selling you a car for $100 over his cost, this is technically true (technically, it's also "pupu de vaca").

Some retailers will go a bit over keystone in order to offset shipping and stocking costs (i.e. the last box of anything very rarely gets sold), which means that you can see some stores multiplying their cost by 2.1 or 2.2 to sell the item.

The small costs you're referring to apply mostly to large chains that take care of their own manufacturing, but then you must also consider that managing a production line also has associated costs, so it's not entirely true that gap sells for $100 a pair of pants that cost them $10 in china. The $90 of "profit" cover the costs of getting those pants from a designer's drawing to a chinese factory and back to the mall. I'd say that perhaps $10 or $15 are net profit (by these I'm referring to the money GAP's owners use to vacation in the hamptons or send their kids to college).

Alex

>I suspect that the real story is that TRUE "cost" is much lower than presented cost. If the stuff comes from China you can bet its true cost is piddly.
>I can imagine a wholly owned subsidiary of a major retailer importing stuff and then 'selling' it at considerable markup to the retail branch, thus establishing a cost at retail that is inflated in the first place.
>
>cheers