It costs AT&T
2.2 cents per minute to transmit long-distance
. And they charge us about 12 cents per minute. Yes. But how much did that first minute
cost? How many millions, even billions of dollars did they put into satellites
and ground crews
A good corollary is drug companies. Sure, it only costs about fifty cents to make a pill, and they charge five bucks a pop when they sell it. But how much did that first pill cost? How many other pills did they invest in and never see pan out? We pay for that, too, as we should.
No matter what you hear, unless something extraordinary or illegal is going on, most businesses operate on a profit margin of about 2 to 3 percent. That means for every dollar you spend, about two to three pennies of that is profit for the company. Those few pennies are essentially return on the risk the investors took with their money, choosing to put their money in this company and not another.
If you hear a number that is too incredible to be true, it probably isn't.