Question

Would you expect Starbucks to have a lower profit margin than a publishing company?

Answer 1

Starbucks can have a lower profit margin than a publishing company. These two are completely different segments of business and have different revenue and cost drivers of the business.

Starbucks have lower profit margin due to significant fixed cost attached to its stores and lower sales which impact the profit margin. It also include the inventory costs as well as operating costs as well.

However publishing company can have higher margins due to the fact that the fixed costs are lower and the business is a lot more technology driven like e books.