It is a key number in economics.
For small businesses (still the vast majority of businesses around the world), the average profit margin is under 10%. Restaurants are most likely around 3%. What that means is that for every $100 spent by a business, they make $3 in (return) profit. And that’s when things are good. Gas stations hover around 2% profit margin. Shit is rough.
An app store, like the info about Google Play showed us recently, has a profit margin of over 60%. Yup, from every $100 spent, Google makes 60 bucks.
This is, simply put, insane profit margin. Absolutely batshit insane.
You would think that yeah sure, software IS a high profit margin business. True. But over 60% profit margin and they never gave a bigger share to their developers, ever? And then they want to give a bigger share to one developer called Netflix, who doesn’t need a cut because they’re a thriving business? It’s wild. NDAs and “soft” monopolies are enabling all kinds of abuse and supercharging greed.
By the way Apple has a profit margin of 68% on their latest phones, so it’s not like Big Tech is only profiting like crazy on software. To reach a margin that high on a physical, expensive device is another level of ruthlessness: imagine hundreds of suppliers getting squeezed, dealing with single digit profit margins at best, hearing that their client boast how they’re printing money while avoiding paying taxes. Infuriating.
This is why there’s capitalism (mom and pop restaurant trying to satisfy customers and simply be) and there’s capitalism (absolute abuse of power from overly wealthy company to extract staggering, not-shared profit while doing the least possible).