Why a $100 sale can lose money
A $100 sneaker sale faces $45 in production costs, $3 in card fees, and $60 in operating expenses, showing how more sales can actually create bigger losses.
When a customer buys $100 sneakers, that deposit is not automatically profit. The factory, freight, and packaging cost $45.
Card fees and operating costs
Then card fees take another three dollars. Suppose those operating costs consume sixty dollars. More sales can therefore create bigger losses.
Accounting profit versus cash
Even accounting profit differs from cash in the bank. Taxes, debt payments, and new equipment move cash again.
The math reveals a harsh reality for retailers. A $100 transaction leaves just $52 after production and card processing. When operating costs hit $60, each sale generates an $8 loss. Scaling up simply multiplies the problem.
The gap between revenue and actual cash widens further once the business pays taxes on any accounting profit, services debt, or invests in new equipment. What looks like a successful sale on paper can drain the bank account in practice.
