Anglesea_25 wrote: ↑Sun Jun 02, 2019 12:10 pm
The other bands are £14, these ones are £16. So, in order to donate 20% Grace has actually increased the price by 14% so it barely affects her profits
My feelings towards Grace recently went from ambivalence to annoyance, but now I am LIVID.
THANK YOU, Angelsea, for bringing this up/putting this in mathematical terms. The thing is, the 20% profit & 14% selling price increase comparison is bad enough, but if you do the full maths on this, it is not actually ‘barely affecting her profits,’ its INCREASING her profits, no matter which way you slice it
Since Grace posted her condescending, idiotic Tweets about this, I’d like to break the maths down even further:
Let’s say her usual net profit margin (she didn’t say if she’d be donating based on gross or net profit, I’m using net because it is the ‘true’ profit and accounts for ALL expenses, including manufacturing, operations, and investment back into the company) on the £14 bands is as low as 10%: That’d make her profit £1.40 per band. At a £14 selling price per band the 20% of profit for charity on the Pride bands would be £0.28, with £1.12 for Grace. At a £16 selling price per band the profit margin increases, because the cost price per band - manufacturing, selling, site hosting, packaging, shipping incompetent customer service et cetera - will stay the same (in this example, £12.60), there is no reason for the CP for the Pride bands to be more than the usual band CP. Thus, on a £16 band the profit less CP would be £3.40 (a higher, but irrelevant for this calculation, profit margin). 20% of that would be £0.68 for charity, with £2.72 for Grace.
SO, while it is true that increasing the price of the Pride band to £16 does result in higher profit amount for the charity, it also results in a higher profit amount for Grace. This would be true no matter what the actual cost price and profit margin on the £14 bands usually is—because she is increasing the selling price by as much as 14%, while the cost price remains the same, and is offering only 20% of profit, she will always win on the bottom line, by 4x as much as the charity. You can substitute any percentage for the profit margin — 1%, 15%, 50%, 80% (I did all of these to check my maths, but won’t bore you with further calculations) — the bottom line will remain the same, the charity will make more than on a £14 SP, but so will she. If the goal of the price increase was truly solely to raise more for the charity while simultaneously keeping her own all-important bottom line the same so as to not impact the operationability of her business, she should have just offered the full £2 increase to the charity. I cannot reiterate this enough: Since the cost price of the Pride bands WILL NOT be higher, the £2 is pure profit on top of the usual profit she’d make on the £14 SP bands. Thus, while her percentage of profit on a £16 SP band would technically be lower than on a £14 SP band, this would only be because the selling price is now higher, NOT because her bottom line suddenly decreased. Her actual profit amount would remain the same as it usually is; in the 10% usual profit margin example: £12.60 CP + £1.40 Profit for Grace + £2 for the charity = £16.00, everyone wins. This is of course if it were fair for her to want to break even on her usual bottom line, when she should be offering a bit of her own profit IN ADDITION, not only to back up her virtue signalling, but because she might sell more bands than she usually would simply because it’s for Pride, and should as a show of good faith for the increased sales be willing to offer up a tiny bit of her profit margin.
Someone can check me on the above calculations, but I promise they’re correct. The ONLY way what I’ve worked out would not be true is if she meant she was offering up 20% of her gross profit (selling price less cost of product alone — which excludes operational cost + re-investment). I highly, highly, HIGHLY doubt she was offering THAT, all companies that offer a percentage of profit offer a percentage of true (net) profit, since operational costs are typically high, although significantly lower in online business. It would also be incredibly stupid to do that instead of just increasing the price by £2 and then giving the charity that £2. But EVEN if it were the case that, by some miracle, she was offering 20% percent of gross profit, she will STILL be profiteering from the Pride bands and the price increase, albeit less than if she were merely offering 20% of net profit.
TL/DR: Not only is Grace not sacrificing even a teeny tiny amount of her usual £14 band profit by selling the Pride bands at £16 with 20% going to the LGBTQ+ charity, she is gaining MORE profit than she usually would on her £14 bands. Now, you could say at least the charity is still getting the 20%, which is income they would not have had otherwise, and agree, but I wanted it to be patently clear exactly what Grace stands to gain by this — it is not just increased sales overall, it is an actual higher profit amount per band. This shady bitch is literally profiteering off of Pride and LGBTQ+
