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deepsun 4 hours ago

And ideal effective market must have a zero margins. That's normal, what the economy strives for, what customers want.

If some market has large margins, it means it has some inefficiencies.

SoftTalker 2 hours ago | parent | next [-]

Ideally yes, in practice it needs to return more than just parking your money in a savings account.

lazide 3 hours ago | parent | prev [-]

It is impossible to have (actual) zero margins.

6510 2 hours ago | parent | next [-]

It isn't, you can do things as a side project.

I thought about quite often while visiting a pub owned by the land lord renting out 150 rooms above. Each floor had a large industrial shared kitchen, shared bathrooms, toilets and a large shared living room. If people had 1-2 guests they would stay in their room, if they had 2-10 guests they would use the shared space, if they had 4-80 guests they would take the elevator to the pub. When one was bored with the guests or didn't have time they were left in the pub. Technically people had bar shifts in their rent contract (that you could buy your way out of) but there were plenty who enjoyed running the bar for free. Drinks were at cost. If you tried to tip or didn't take your change they left it on the counter and it would sit there for a day or two. The problem of the pinball machine earnings they solved with rounds of free drinks and chips.

When asked the owner said exploiting a bar was entirely to much work. If he wanted more money from the people living there he could just increase the rent?

lazide 2 hours ago | parent [-]

Those are negative margins.

phil21 an hour ago | parent [-]

Yeah this is just describing providing amenity for common areas in a shared building. Not much different from the doorman and free water bottles in the lobby or the rooftop swimming pool being baked into the rent of the units.

rubyn00bie an hour ago | parent | prev [-]

It depends on what you mean, do you mean both gross and net? Just one of the two?

Gross margin of zero would be mean you sell at exactly the cost to produce. Net margin of zero means you cover all your expenses including COGS. The only really difficult, practically impossible, thing would be doing both at the same time. Though, I could also see a case where you drive down net margins once sunk costs are paid and achieve both.

Doing so practically, or sustainably, in most circumstances would be uhh crazy… but it’s not impossible. Even then I think aiming for zero margin is a pretty credible tactic in eliminating competition if you can out sustain them.

TLDR; Weird? Sure. But not impossible. And even sort of likely if you’re trying to atrophy your competition out of existence.