Wrong!!!
Follow my thought process: Profit Margin = Income/Revenue (or sales)
If my company sells 100,000 in product and the product cost is 50,000…then my Profit Margin is 50%.
If my company sells 100,000 in product and the product cost is 25,000…then my Profit Margin is 75%.
But wait, I must stay competitive, right? So now that we have access to the commodity (which is cheaper) forcing the cost of production lower by all production companies in the business now my company sells 50,000 in product, but hey, my product cost was just 25,000 which still generates me a 50% margin.
The bottom line is this: It will be “sales” that put my company above my competitors…not the cost of the commodity. Sales, Sales, Sales, 3 words!