Industry Profitability

I've prompted myself to do this detailed profitability analysis since I've recently reached a skill milestone that will impact a variety of my underlying costs. In determining whether the skill books are worth the cost (some of them are quite expensive), I wanted to figure out where my break-even value for each book would be, split into various components.

I've separated my transactions into a variety of smaller codes but have decided to summarize them into three categories: per unit costs, per unit tax costs, and per unit revenues.

The per unit costs are the raw material purchase prices that I pay on the market, including any brokerage fees for placing orders or additional costs imposed by a contract. For example, placing a contract with a supplier is a fixed brokerage cost of 10,000 ISK. If that's for one unit, that's a hefty cost but at my current volume my typical brokerage is around 100K (just short of 1% of my orders).

The per unit tax costs are those taxes imposed on various aspects that do not include the direct buying or selling of products. For my planetary interaction goods, these are import and export costs.

The per unit revenue is my average revenue per unit over the current life of my project. This figure includes transaction and brokerage taxes.

Info	Revenue	Variable Cost	Taxes	Profit
Total	255,587,051	166,338,225	73,029,600	16,219,226
Per Unit	1,234,720	804,014	352,800	77,906

My return on each unit is only 6.7%, which is quite disappointing. I significantly underestimated the level of taxes that I would face in this business. There is not much room for me to reduce my individual variable costs; however, there are some avenues to reducing my tax costs that I am actively pursuing. I believe that by the end of this week I'll be able to get some quick improvements that will raise my profit per unit to around $100K each, which would improve my return to 8.6%. At 6.7%, I would be better off not buying the individual inputs and selling the intermediate inputs that I'm creating myself. I need to reach 12% for my industry to be profitable in the "cost of capital" sense. I believe that point is reachable in the long run; however, I'll need to do further analysis in the near-term to see if I shouldn't seriously consider liquidating or stopping production until my cost-cutting measures are fully implemented.