Why can’t we define what is a fair profit margin?
Published:Tuesday | April 29, 2025 | 12:05 AM
THE EDITOR, Madam:
The opening of the Chinese auto mechanic establishment and the favourable reviews it has been receiving on social media has awakened Jamaican consumers’ consciousness to a level not seen since the ‘70s and ‘80s.
For far too long Jamaica’s business environment has fostered the mentality that whatever business one engages in significant profit margins can be made without worrying about innovation and productivity. This mentality boasts that all that a business person/entity needs to make super profits is to be brave enough to raise their prices whenever they feel the need to do so. Relative costs to producing those goods and services are never factors that determine what they are sold to the end-users for.
Commercial banks that should be the epitome of innovation and creativity, designing products and services that would allow them to sustain their core function, have now become major players in just about every other sector. How can one have confidence in the effectiveness of the banks when their financials are indicating that their largest streams of revenue are fees and commitments, foreign exchange trading, purchase of government papers, and investments in other companies?
Unfortunately this debilitating mentality of not buying the cow because one can get the milk free, does not stop with banks executives and directors. Take for example, those persons we refer to as fudgie or creamie. These men sell a two-scoop of ice cream on the cone for J$700. But when I purchase the 1.5 gallon of ice cream from the outlet I pay J$2,100 for it and I am able to get more than 50 scoops from it. It therefore means that the fudgie has grossed J$17,500 from the sale of his 1.5 gallon of ice cream.
No matter how liberal one gets in applying added expenses for cones, dry ice, petrol, and return on investment, this fudgie is laughing all the way to the bank. (bank/fudgie? Birds of a feather).
If you thought selling ice cream was super profitable wait until you hear that the same fudgie buys half dozen ice cream cakes for J$2,000 and sells one for J$600.
From these examples of banks’ executives and the fudge men it should be clear to everyone that Jamaica’s culture of arbitrary pricing incentives low productivity, stagnation, and aversion to innovation.
Notwithstanding the aversion some interest groups have show for it, the above mentioned scenarios have necessitated the urgency that a conversation on what is a just and reasonable return on investment has become a national imperative.
CASHLEY BROWN