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Few days ago I sold a domain that achieved infinite markup and 100% profit margin
How?
Simple, the domain was SquadHelp owned domain that they registered not me, and they paid the renewals, then I sold it to someone else for $12.
Cost = $0
Selling price = $12
Markup = ($12 - 0) / 0 = infinity
However:
Infinite markup is impossible and can't be real, in reality there was an embedded cost even if I didn't pay anything for domain my self. Here is how:
- Lets say it took me 10 minutes to came up with the name
- Lets put the value of my time aside (considering that it was during my free time)
- That 10 minutes of work that included brainstorming and using my laptop costed me:
#1 is straight forward:
Cost of 10 minutes of electricity in my house = $0.028
Lets say my laptop consumes 5% of my house electricity => $0.0014
#2 is very hard to calculate, but if we consider that on average a person consumes 2500 calories per day,
then:
10 minutes costs about 17 calories.
100 grams of wheat flour gives 364 calories => 5 grams of flour gives 17 calories
The price of 1kg of flour is $1 => cost of 5 grams of flour is $0.005
=> Energy consumed in 10 minutes = 17 calories = $0.005
Total cost = $0.0014 (electricity) + $0.005 (food) = $0.0064
Actual Markup = $12 - $0.0064 / $0.0064 = 1874
Markup Percentage = 187400%
How?
Simple, the domain was SquadHelp owned domain that they registered not me, and they paid the renewals, then I sold it to someone else for $12.
Cost = $0
Selling price = $12
Markup = ($12 - 0) / 0 = infinity
However:
Infinite markup is impossible and can't be real, in reality there was an embedded cost even if I didn't pay anything for domain my self. Here is how:
- Lets say it took me 10 minutes to came up with the name
- Lets put the value of my time aside (considering that it was during my free time)
- That 10 minutes of work that included brainstorming and using my laptop costed me:
- Electricity consumed by my laptop
- Energy consumed by my brain and body
#1 is straight forward:
Cost of 10 minutes of electricity in my house = $0.028
Lets say my laptop consumes 5% of my house electricity => $0.0014
#2 is very hard to calculate, but if we consider that on average a person consumes 2500 calories per day,
then:
10 minutes costs about 17 calories.
100 grams of wheat flour gives 364 calories => 5 grams of flour gives 17 calories
The price of 1kg of flour is $1 => cost of 5 grams of flour is $0.005
=> Energy consumed in 10 minutes = 17 calories = $0.005
Total cost = $0.0014 (electricity) + $0.005 (food) = $0.0064
Actual Markup = $12 - $0.0064 / $0.0064 = 1874
Markup Percentage = 187400%
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