Ratio of [price paid for the end product] to [the cost of raw materials/extraction].
e.g.. petrol:crude oil or drugs:crops would be so high that people are willing to kill to gain a monopoly of the highly profitable trade. it is not as simple as ROI, I think.
Gross Margin?
no i dont think it is called 'Gross Margin' as far as i know The Gross Margin is gross cost of goods sold plus alteration room and workroom net cost, if any, less each discount earned on purchases. Vik
Could it be "Gearing" ?
Derek
That is the same as leverage which is usually for housing loans.
Let me give an example to illustrate:
Evian bottled water has a price that includes the premium for its brand, marketing costs, packaging,etc and when the retail price is compared with cost of extracting water, the ratio is large enough to justify financing such a business. The same with Pepsi, where its raw materials namely sugar,water,etc are cheap but put together and cleverly marketed, the end product makes this profitable. So what is the ratio (say 70:1) of Price of Pepsi : {cost of sugar,water,labour,etc} called?
Gradient of average price-cost graph? or something similar to benefit-cost ratio? can't find the exact formula...
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