Gross margins

There is an interesting discussion regarding margins, since you can have positive gross margins and negative net margins. That means that you are selling your product above the cost of creating it, but below the overall cost of operating your company.

Imagine you have a website and you pay 10 for hosting. You can charge 15 to each customer, and you would have a positive gross margin. However, your business expenses, such as marketing and management may exceed 5, and thus the company loses money.

The image above shows a standard cost and profit overview for scientific products. In the schematic there is not even licensing, which will chirp away the profits. I think this is something many scipreneurs get wrong. They see the price of existing devices and think they'll beat them in price, let's "democratize!". However, even if your COGS are $1/10$ of what is available in the market, your final price will be $\approx 7/10$. Not such a good deal after all.