Replies to post #16035 on Eco Building Products Inc. (fka ECOB)

[Ed the Trader]

"the more ECOB sells, the more it loses has been the performance so far, which makes it obvious that they are selling below cost. it fact, it appears as though it is selling below cash costs as the accumulated deficit continues to increase."

Yup... that would be a huge problem. That is why I carefully qualified by original post on this topic: "I don't know how much of those operating expenses are fixed costs and how much are variable costs, but if they can keep the variable costs down, they are not that far from reaching income levels that will cover their current operating costs." If a product's sale price will not cover the variable costs of bringing that product to market, there is no possibility of ever making a profit by selling the product because variable costs are proportional to the amount of the product sold.

The only solution is to figure out how to lower those variable costs or raise prices. Variable costs rarely get cheaper with scale unless one gets better rates on some costs (ie: transportation costs, raw material costs, utility costs, etc.) with larger scale. Unless one is specifically doing small quantity product runs initially as a proof of concept, knowing ahead of time that the initial run(s) will lose money, there is no way a business should ever produce a product in the first place where the intended sale price does not cover variable costs. That is very, very not good.