A Little about Cost Markups: What do Balloons, Movie Theater Popcorn, Snow Cones and Starbucks Coffee have in common? They, along with Cotton Candy and Fountain Drinks are on the list of

But what is a “Markup?” and “What does this mean to us?” Markup, or Margin, is a marketing term for the price that a business puts on a product above what it costs to produce and deliver the good, usually determined as a percentage. In other words: the part that is straight profit.

Certainly there are more expensive items than coffee, cotton candy and popcorn –like porsches, condominiums and golf resorts– so what makes these items special? What kind of a markup would cause such a big deal?

How about this: No matter what a company sells, their price is a combination of two numbers: the cost of making and transporting the good they are selling (COGS) and the margin of profit (Markup).

COGS + Markup = Price

COGS is a set cost determined by the various expenses, fixed—such as overhead and insurance, and variable—such as raw materials and employee wages, that go into producing the product. Companies can do very little to affect this aspect of price, or at least that’s how I see it from the marketing side of the fence. The second part of price, however, the markup, can be shifted easily—this has no basis other than the price your customer is willing to bear.

For most consumer products, the average markup (“Retail”) is about 30%. For commodities –sugar, soap, pillowcases– markup is closer to 10%. But for “Premium” products –retail items aimed at the very rich, or the very demading (this is where we talked about Porsches, but also includes watches, Italian shoes, and vodka)– markups often approach 200% of Cost. And then “Ultra Premium” –products called by names like Mikimoto, Piaget, and Alfa Romeo– enjoy 400 and 500% markups. People gladly paying $750,000 for a car that costs around $20,000 to produce. For more on this, here is a great link.

But these don’t touch the 99.9% profit margins of the products mentioned above– the less than 1/50 of a cent that it costs to produce the .5 grams of a latex balloon that is filled with a burst of helium valued at 1/80 of a penny and sold for $3.00 at fairs and circuses across the US. This equates to a 1000% markup above COGS. Similar equations can be run for cotton candy, snow cones, your super-value bucket at the movie theater and your double iced caramel machiatto.

Imagine paying a 1000% markup on your car or your next burrito. That would be a $20,000,000 Altima or an $850 dollar Carne Asada bowl.

I am going to share with you today’s observation of China. Close your eyes and envision a map of the United States. Okay, now open your eyes and keep reading… You’re going to point on that map to these locations as I list them: New York, Los Angeles, Chicago, Houston, Philadelphia, Phoenix, San Antonio, San Diego, Dallas, San Jose. These are the Top 10 U.S. Cities by Population and Rank. You may have noticed your finger stopped in about every major region of the country and crossed the continent at least 3 times. Further down that list you’d touch Detroit, Memphis, Jacksonville and Seattle at 23.

Now, the Top 10 Cities in China are Shanghai, Beijing, Shenzhen, Guanzhou, Tianjin, Nanjing, Dalian, Hangzhou, Shenyang and Harbin. If you were to do the same mental map-pointing with this country, you’d find your finger never strayed from the east coast. In fact, you’d find that most of these cities, 8 out of 10, cluster like shotgun fire to within 2 hours of each other.

China is a huge country, roughly the same area as the United States, but with more than four times the population. Across such a broad expanse of people and geography, one expects the country to have developed several distinct and unique cities and cultures. In the US, for example, we have Northerners and Southerners, we have City People and Country People, but we also have Suburbanites, Rednecks, New Englanders, Westerners, Mid-Westerners, Snow Birds, Beach Bums, Grunge Rockers, Cowboys, and Californians. There are lots of different lifestyles with different cultures and values, but these groups are dispersed across the length and breadth of the country. From what I can tell, China does not work this way.

In China, the businesses, industries, infrastructure, government, and foreign political influence—not to mention the wealth and leading founts of culture—are all located on a stretch of the country’s east coast spanning from Beijing down to Shanghai, the rough equivalent of the state of California. Meanwhile, the western portion of the country, perhaps 90% of the land area, is occupied by about 60% of the population and responsible for less than 25% of the GDP.

So, why does this strong disparity between East and West exist in China? Similar to that of the industrial North and agrarian South in the antebellum US, the cause is the drastically different cost of doing business in the regions. “The government is doing things to move China west,” said Randy Creel, a logistics expert at a major MNC in China. “The hesitation is the lack of infrastructure and its effect on logistics costs.” Effects on logistics costs that work out to about 200% more investment per mile for companies to run their businesses in Western China. China is on a self-perpetuating cycle of eastern growth and western lag that will require more than government incentives to Western businesses and FDI spenders. It may require an all-out reallocation of infrastructure build-up that the country has never before undertaken. At least not until the 2008 Beijing Olympics. –Shawn Butler

[youtube=http://www.youtube.com/watch?v=IIAdHEwiAy8]

This is a clip from “The Life of Brian” where Brian goes through a Basic Latin Lesson with a Roman Guard. (To See the Full Text Go Here).

CENTURION: Conjugate the verb ‘to go’.
BRIAN: ‘Ire’ – ‘Eo’. ‘Is’. ‘It’. ‘Imus’. ‘Itis’. ‘Eunt’
CENTURION: So ‘eunt’ is…?
BRIAN: Third person plural present indicative. ‘They go’.
CENTURION: But ‘Romans, go home’ is an order, so you must use the…?
BRIAN: The imperative!
CENTURION: Which is…?
BRIAN: Umm! Oh. ‘I’!
CENTURION: How many Romans?
BRIAN: Ah! ‘I’– Plural. Plural. ‘Ite’. ‘Ite’.

This is simply to complete my minimum requirement of Blogs for the month of August because I will be in NYC until after Labor Day. I have found that each month sort of develops an Unofficial Theme… Last month’s theme was “Why Steve Jobs Bugs Me.” The theme for the month of May was “Ambitious Things Other People are Doing.” April’s was “Stuff I Bought.” Well, August’s Unofficial Theme was “How Awesome is Latin?”

And, while searching Google, Ask.com, and Technorati for my blog, I recognized a common error I would like to address: Latin, the Awesome but Dead Language, is often confused with Latin as in Latin America, our Spanish-speaking brothers to the south.

This same error was attributed to Vice President Quayle in the quote: “I was recently on a tour of Latin America, and the only regret I have was that I didn’t study Latin harder in school so I could converse with those people.”

To Clarify this Point- Latin America is the region of North, South, and Central America where Romance languages are spoken, specifically Spanish and Portuguese. Interestingly enough, Quebec, although a fellow Romance-language speaker, is NOT considered part of Latin America. I think they should make an appeal. They don’t speak English, so where DO they belong?

To help you avoid confusion and potential embarassment, here are some examples of
Instances where people say “Latin”
and are NOT referring to
the Awesome but Dead Language:

Latin Dancing: As in “I like watching Latin dancing.” They are NOT referring to dances done by men in Roman togas, but to a whole style of dance including the Samba, Paso Doble, and Cha Cha that are characterized by much hip wiggling, short lop-sided skirts, and men in tight pants.
Fun Fact: All Latin Dancing can be done to the 80′s Madonna hit Holiday.

Latin Music: As in “I love listening to Latin music.” They are NOT referring to their record album of Pange Lingua done in Gregorian Chant, but to a hard-to-categorize genre of music with mostly Spanish lyrics. This includes everything from Mexican Ranchero, Luis Miguel, Control Machete, to Enrique Iglesias and Shakira. They even include Christina Aguilera, just because her last name is Spanish.

Latin Lover: As in “What’s hotter than a Latin lover?” Contrary to what you might think, this does NOT mean someone who took Latin and really loved it, then spent the next few years touring Italy and majoring in the Classics. Most typically, it is referring to a sexual partner, usually not a spouse, that is of hispanic origin. Who knew, right?

Latin Kings: As in “Can I join the Latin kings?” This is apparently NOT a bunch of Latin Professors or Catholic Cardinals that have formed a chess club, but in fact is a Puerto Rican Street Gang from Chicago. You can see how this might lead to confusion.

Um… that’s all I could find. I’m open to suggestions for More Helpful Hints. And… You’re Welcome! –Shawn Butler

People who know how to use Latin should. Use of Latin makes you look Smart. However, trying to use words you don’t understand is one of the fastest ways to look Stupid. I have taken the time to compile a list of tips on common Latin terms and phrases and how they should be used. I call it:

*Note: This is not a Latin Dictionary. It would be silly to attempt to put all the common words and phrases of Latin that we use into one list. Besides, it’s already been done.

Alumnus: “Nurseling.” A graduate from a school. The trick is when to use Alumnus vs. Alumni. Background: Latin nouns consider not only Number (English’s Singular vs. Plural), but also Gender and Case. Below is an easy-to-use chart that should clear this up for everyone.

So, “Alumnus” is singular masculine. For a girl, you should say “Alumna” pronounced “A-LUM-Nuh.” “Alumni” is plural for a male or mixed group.

If it’s all girls, you could look brilliant by saying “Alumnae,” pronounced “A-LUM-Nay,” but chances are you’ll still look stupid because most listeners will only know enough about this term to think you mispronounced something.

Cum Laude: “With praise.” Indicates exceptional academic standing. This one bothers me for a different reason. The correct pronunciation is this: “Coom LOUD-ay.” However, this word has become part of English vernacular, like burrito and déjà vu. For a lingual Purist, I say go ahead and pronounce this with your best Latin accent, but in the interest of just not looking Stupid while trying to look Smart, the modern vernacular holds this to be said as “Coom Lawd.”

I may as well cover the variations of this here as well:
Magna Cum Laude “With great praise” and
Summa (“SOOM-uh” not “Some-uh”) Cum Laude “With greatest praise.”

Etc. abbreviation for Et cetera: “And the rest.” On this one, I do not follow the decline of modern English vernacular. This is pronounced “Et Set-er-ah,” there is no “Eks” sound.
Also, “Etc.” is used entirely too much. There are three rules for its usage:
1. Do not use “Etc.” if you have already made a full list. Example: “Call me if you have any problems, concerns, issues, etc.” What else is there? More synonyms?
2. Do not use “Etc.” when the rest of the list is unknown. Example: “I enjoy reading, sports, astronomy, etc.” Paleozoology? You know, the Rest of the stuff I enjoy…
2. Do not use “And Etc.” This is redundant as “Et” is the Latin word for “And.” Example: “We are studying Western Europe: France, Spain, Italy, and etc.”
3. Do not use “Etc.” when referring to people. For this purpose, use Et Al.

Et Al. abbreviation for Et Alia: “And Others.” For More on How Not To Look Stupid Using This One, See Previous Blog.

E.g. abbreviation for Exempli Gratia: “For Example.” For More on How Not To Look Stupid Using This One, See Previous Blog.

I.e. abbreviation for Id Est: “That Is.” For More on How Not To Look Stupid Using This One, See Previous Blog.

Ibid. abbreviation for Ibidem: “In the same place.” Pronounced “ib-EED-em.” This is a time saver, usually seen in academic writing when an author is citing passages from the same source. It is a Smart way of saying, “I already gave you this info.” To avoid looking stupid, again we must be careful not to use words we don’t know the meaning of, e.g.- “I have collected some great quotes from Plato, Cicero, Ibid, and Anon.”

M.O. abbreviation for Modus Operandi: “Mode of Operation” Pronounced “MODE-us op-ehr-ON-dee,” there is no “die” at the end, no matter what you heard on C.S.I. It refers to the particular method that characterizes a person.

Per se: “In and of itself.” Pronounced “per say” but spelled “per se.” The spelling is key! For More on How Not To Look Stupid Using This One, See Previous Blog.

Sic: “Thus.” This means “intentionally so written;” in other words, the editor or author knew they were misspelling something or using slang or bad grammar in an otherwise formal document.

Vice Versa: “The other way around.” Again, the correct pronunciation is this: “vee-kay ver-suh.” However, one will sound Stupider by trying to sound Smart. This has fallen into common usage and is typically pronounced as it is spelled. I often hear imbeciles thinking they sound Smart with strange pronunciations like “Visa Versa” or “Vee-say Ver-say.” Unfortunately, the answer is that they are still wrong.

–Shawn Butler