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How much for that Belkin cable? Margin of 1,992%?

Unless it has a cost of £0 or you are being paid to sell it (as in taking it below £0 cost), a product can't be sold at more than 99.9(recurring)% margin.

So how have they come up with 1992% and those other ridiculous figures?

Confusing margin and mark-up perhaps?

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Joke

"So how have they come up with 1992% and those other ridiculous figures?"

The same way they came up with £350 million per day for the NHS.

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Facepalm

Actually,you're right, and I've been wrong all these years...

"Profit margin is calculated with selling price (or revenue) taken as base times 100. It is the percentage of selling price that is turned into profit, whereas "profit percentage" or "markup" is the percentage of cost price that one gets as profit on top of cost price."

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@tfewster didn't see the original comment, but thumbs up for looking it up!

Mathematical impossibilities aside, let's just be clear that nobody has made their millions selling a Belkin cable to public sector at 1929% markup. Let's say it's a £1.30 3m Cat6 cable, that only makes it £26.38 ex VAT sell to the customer. Now obviously that's a HUGE rip-off for what it is.....but that doesn't change the fact that it's just £26 and change.

And let's be honest...it's still got nothing on Monster cables in Currys.

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Some "unscrupulous" tech suppliers

I think the terms "some" and "unscrupulous" are redundant here ... remember in the free market the price is dictated by both buyer and seller ... just buy from the 'best value' (product of cost, quality and service) and be prepared to walk when the seller tries to pull a fast one.

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Anonymous Coward

Re: Some "unscrupulous" tech suppliers

just buy from the 'best value' (product of cost, quality and service)

Have you ever tried to procure IT kit in the public sector?

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Best practice is 3% margin?

My arse it is. It is certainly what buyers would LIKE to pay, but even as a net corporate margin, you'd get more as a regulated zero risk utility.

Of course, it may be that 3% is what vendors tell buyers that they're making.

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Anonymous Coward

Re: Best practice is 3% margin?

I thought it was interesting that there is a "Society for IT Managers" that was stating this.

I've never hear of this society but it might explain a strange conversation I had in the New Zealand airport a few years ago.

As I approaching border control to enter the country two police stopped me and asked what I did for a living. At the time I described myself as an IT manager. One of them then said "What is the drug scene like for IT Managers?"

I was confused and wasn't sure how to answer. the other looked at me and said "Is there many drugs used?". I stumbled and said, confusingly "I don't know, I don't know any other IT Managers and I don't really hang around in groups of them". It seemed a bizarre question, but I guess they were just trying to trip people up and it may work for other professions.

However now I guess they were talking about the "Society for IT Managers" and what they get up to, maybe they were looking for a spy or had some intelligence on them?? Who knows, but it seems like they like to party hard.

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Re: Best practice is 3% margin?

3% gross margin ... and these are the same people complaining when jobs leave the country to low-cost areas etc ... How are companies supposed to operate at 3% GM? People cost money, operating cost money, marketing cost money, preparing the tenders cost money ...

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Happy

Re: Best practice is 3% margin?

> I thought it was interesting that there is a "Society for IT Managers" that was stating this.

Perhaps they are henchmen of the spectacularly-pretentiously-named "Worshipful Company of Information Technologists" which never fails to amuse me on the rare occasions they come out of the woodwork?

Or maybe it should be "hench-organisation"...?

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Coat

Re: Best practice is 3% margin?

Maybe they were checking to see if you were part of the inner circle - the Society of Hardcore IT Honchos, Extra-Achievers Division ?

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Stop

How much for that Belkin cable?

This local council paid HOW MUCH for an SD card?!

I don't know - the article doesn't actually say and I couldn't find a link.

I'm sure there's some really juicy numbers in the survey - but please why not actually give at least the equivalent of they spent £#### on an Xgb card.

Bearing in mind that 100% margin is a doubling in cost price, coughing up a 1095 per cent margin on an SD memory card. is 11 times bigger than that. But on what starting price?

Devil's in the detail.

The quote is my comment on last year's version of this story and pretty much stands without needing to be modified. Either a link to the survey or some indication of actual prices paid would provide some much needed context.

Edit: The Link to the Survey (Email Registration Required) IT margins benchmarking study 2017: The avoidable cost to business

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Re: How much for that Belkin cable?

>>Bearing in mind that 100% margin is a doubling in cost price, <<

No it's not. Doubling of cost price is 50% margin.

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Re: How much for that Belkin cable?

>>>>Bearing in mind that 100% margin is a doubling in cost price, <<

>>No it's not. Doubling of cost price is 50% margin.

Yep, indeed, doubling the cost is a 50% margin. It's 100% markup. The only way to get 100% margin is to sell something for money that cost you zero to purchase or obtain.

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Re: How much for that Belkin cable?

Indeed. But it would have been wrong to change what was quoted text. And seemed pretentious to mark it "sic"

But well done on missing the point - that the article is devoid of numbers that would have lent context to the article

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Re: How much for that Belkin cable?

This local council paid HOW MUCH for an SD card?!

I had a friend who worked as a sales rep for the Chinese company who supplies a lot of the major MicroSD/Flash market with their products. He would often quote me prices like "Sandisc 128GB MicroSD for $3.25 CDN" or "Kingston MicroSD for $1.50 CDN". Then you go and look in the retail shops, and the same Kingston MicroSD is selling for $250 CDN.

The markups mentioned in this article are similar. It's just that now that the UK is preparing to Brexit, people want to pretend they are getting shafted because of brexit itself, not because retailers ALWAYS shaft consumers.

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Re: How much for that Belkin cable?

is it a one off or multiple purchases? i know I've couriered things before that cost more to courier than buy (it was an emergency)

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Anonymous Coward

That article could serve as an example on how a journalist can massage numbers until they're big and scary, without providing a single reference point that would qualify it as "news".

Such as:

- what was the original price?

- overall, what's the share of the cost of those 0,5m Cat5 cables in budget prices?

- have the prices in the US and mainland EU changed too?

But no worries, I understand. While you just start to whine about having to suffer the consequences of leaving the EU, here on the mainland, people still whine about the consequence of entering the Euro, with demonstrations just as convincing.

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A thought

Not in defence of gouging and outrageous markup though but sometimes the product is no different but there's an added layer that adds cost.

By way of example. The sugar industry produces pure white sugar. Pure as in 99.9 odd %. This is the stuff that you put on your cereal and in your tea.

This purity will meet Pharmaceutical grade requirements (for making cough medicines and the like) but further testing is required to show that it is really absent from heavy metals, certain bacteria and other unpleasantness. Add in this and traceability and the price goes up relative to a 1kg packet of Silver Spoon on the shelf at Morrisons.

Are any sectors paying extra for added "peace of mind" in way of certification and warranties ?

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Re: A thought

"Are any sectors paying extra for added "peace of mind" in way of certification and warranties ?"

In the case of IT and govt./local govt bodies including the NHS etc, they are usually tied to a "framework agreement" where they can buy only what was specified at the formation of the agreement, and only from a limited list of approved suppliers. Desktops, laptops and servers are usually supplied with up to 5 years on-site warranty too. In the case of desktops, at least, just the case the PC is built in is usually a decently heavy grade of box compared to the cheap paper thin 20 quid ones you get at the local computer shop.

They also generally don't have aggressive buyers out for a good deal. They rely on the companies tendering to compete with each other to produce a good deal. Sadly, it's usually "sealed bids" so it's down to the simply taking the lowest bid rather than make the tenderers bid each down in an auction fashion.

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Re: A thought

Just like deluded hifi aficianods who pay outrageous amounts for exotic metal cables.

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History repeating itself

I remember back in 1971 when the UK changed to decimal.

Hiding price increases was easy when the public were confused by the new coins.

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Anonymous Coward

Slightly OT, but I continue to be amazed at how much retailers will overcharge for products like cables. I had a conversation with my Dad recently - he'd needed a new USB cable for his phone, and had got on in a local shop for a couple of quid.

A few days later he'd been in a big store and seen the same sort of cable on sale for something like £15. He got in touch with me, paranoid that he'd bought something substandard and that it might damage his phone or laptop.

It took quite some time for me to get him to believe that literally the only appreciable difference between the two was the price

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I really need to...

Upgrade my "fee" from a cupcof tea, beer or dinner to a fully catered and furnished 3 day trip away to a tropical island with martinis. Why? Well at that price my services of "turning it off and on again" are much higher srandard thancthe £300 the local IT shop charges!

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To an extent I agree, however when you look at how the cable is comprised there can be a number of differences. Quality of the connectors and the gauge of the wire are all factors which a cheap cable may scrimp on meaning slower charge times and other issues.

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Anonymous Coward

I don't pay £15 for a micro USB cable, but I don't buy cheap ones either now. I have so many that I have where you have to hold it at a certain angle using a nearby wall or book to get the connector to charge, or the connector just doesn't seem to snap in cleanly. Therefore I buy ones for about £6 off amazon that are well made and have good reviews, these have been fine.

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microUSB was designed so that the connector on the cable is sacrificial, rather than the device.

this is why, generally, your four year old Android phone's microUSB port is still working, even if you're on your third cable.

then you can feel sorry for all those iphone owners whose lightning port doesn't work too well because the contacts have lost their springs, and buying a new cable won't help them.

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I went into a computer shop to get a USB cable as I had bought a wireless printer, which naturally didn't come with a USB cable (wireless, innit?) but needed one once for the initial setup. I was fully expecting to pay about a quarter again the price of the printer, as I didn't have time to wait for a £1 one from an Amazon trader or fleabay.

So imagine my surprise when instead of pulling out some nicely labelled oversized bag, the guy in the shop pulled a slightly battered cardboard box out from under the counter, shuffled around, pulled out a cable in cheap cellophane and asked "Will that do?"

I can't remember what he charged me for it, but he instantly became my first recommendation for computer repairs.

A) because he was honest enough that I wouldn't expect him to fleece customers

B) because he clearly had a successful enough business that he didn't feel the need to fleece customers on the day-to-day stuff.

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@wyatt

" To an extent I agree, however when you look at how the cable is comprised there can be a number of differences. Quality of the connectors and the gauge of the wire are all factors which a cheap cable may scrimp on meaning slower charge times and other issues. "

The problem is that many pricey cables in shops are just cheap cables in a nice packet.

The only objective measure of USB cable quality is resistance on the +5V line -- a poor cable will have a higher resistance, meaning slower charging. Funnily enough, even though I own a multimeter, I've never checked my cables for this... must start doing so.

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When I ran a computer shop building pc's etc punters often wanted a printer with their new shiny. Trouble was the big boys were selling your typical domestic Epson etc for £3-£4 below my cost and I had to match. Solution? Sell them a printer cable for £10 at the same time.

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I on the other hand would rather not spend several hours faffing around trying to fix a problem only to discover it was due to an intermittent fault in a dodgy cable. Call that a subjective measure of quality but it's important to me. In fact I have a general rule: software's buggy enough as it is without the additional complication of random hardware failure so paying a bit extra for known good hardware is money well spent.

Of course, cables are a bit of a special problem. With the exception of that Google guy they're not something people tend to review. Then again there was a time that was true of PSUs.

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"microUSB was designed so that the connector on the cable is sacrificial, rather than the device."

And decent cables can be had for less than £2, which is cheap enough to replace them when they start playing up.

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It took quite some time for me to get him to believe that literally the only appreciable difference between the two was the price

Was there a difference is amp's ? Some cables can only carry 1 amp max, others 1.5 or 2 amps. If your dad has a high grade charger that can deliver 2 or more amps, then his cable will get "quite warm" and wear out sooner ...

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Joke

@Hans 1

If your dad has a high grade charger that can deliver 2 or more amps, then his cable will get "quite warm" and wear out sooner ...

I've often wondered about this. Say you buy a "quality" US-made cable and connect it to a cheap Far Eastern charger. Aren't you replacing the good American electrons in the cable with anemic Far Eastern electrons?

These are the sort of things that keep me awake at night.

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In some cases, these crazy prices will be due to, for example, the purchase actually being a pack of 100 but logged as a single item. Or 50m not 50cm.

Ignoring outliers and looking at the 10th percentile would be more informative.

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"for example, the purchase actually being a pack of 100 but logged as a single item."

This is a constant problem at $EMPLOYER. Twats in various departments insist on ordering 1 or 2 ethernet cables at £1 each (or less), despite being repeatedly told that the _internal_ costs of raising orders means that anything less than £20 is not economic - and the suppliers have responded to the abuse by padding prices across the board to take shipping into account, which means when I order £200 pounds worth of cables it can now cost £450.

And yet procurement thinks this is alright.....

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It's not that strange that some individual prices may be way out there for very plausible reasons, looking at the max values are usually not a good idea rather look at 95 or with a large enough sample set 99% values for this kind of things..

Say you are a hospital with your nice shiny nmr or other expensive piece of kit that need that sd card, assume that it's speced to use a specific kind of milspec sd card that is not readily available, then you may well think it fine to have a courier to pick it up at the us manufacturer and jump on the quickest plane available to get it to you rather then having the machine unavailable. Of course then the price you pay will be through the nose.

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WTF?

F35 costs

So prior to Brexit, $:£ was 1:1.48 , currently 1:1.30

Current cost per F35C is $122.8m , UK is buying 138, total is $16,946.400,000

Before Brexit, cost £11,607,123,287

Now, £13,035,699,051

Difference: £1,428,575,764

So £1.4bn cost increase, and that's just the flyaway cost, without maintenance that has to be done in Turkey, or training, or parts etc. So that's 4 weeks of the NHS's alleged extra £350m per week down the drain, along with 3 warships and 1000 marine's jobs.

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Re: F35 costs

'Current cost per F35C is $122.8m , UK is buying 138, total is $16,946.400,000'

Which is why the smart money is on buying the bulk of the 138 towards the latter half of the next decade when the unit price has come down as the production line ramps up.

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Re: F35 costs

"when the unit price has come down"

The unit price will be averaged out across batches and have R&D costs factored in.

In any case, the unit cost of military aircraft has almost never decreased over time.

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Anonymous Coward

This is how the world works.

I'm a purchaser for <insert government financed entity> and I talk to lots of suppliers about what I need.

I now have a choice, do I spend someone else's money on the cheapest or do I spend it with whoever is going to give the biggest kick back for me and my boss?

Sad but true and it won't change until there is full transparency throughout government from the bottom right up to the top.

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Anonymous Coward

...This actually how this part of the world works

now have a choice, do I spend someone else's money on the cheapest or do I buy from my usual supplier, which make my life easy, which I defend by using spurious arguments about "authorised suppliers" so that I don't have to work at getting the best deal. FTFY

And I have the experiences to back this up. I used to buy our kit myself, identifying the best product, investigating tco and sourcing the best possible deal. Then the local authority we were part of went all corporate. We had to use their supply manager, who had no idea of total cost of ownership, always "recommended" the same manufacturers ( we had no choice but to accept - usually the likes of HP) always bought from the same supplier. (ironically one we had been banned from going to ourselves at the start of this process) and usually at a much higher price than I could get it myself, but also with a percentage fee added to pay for the internal " procurement services." And delivery used to take an age, when I could usually get the kit in a day or two.

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Re: ...This actually how this part of the world works

"I could usually get the kit in a day or two."

The problem there is a that "a few bad apples spoil the whole barrel". Most people are honest, like you, but all it takes is one stupid twat to pay over the odds to a friend or family members and suddenly there are knee jerk reactions and new procedures put in place to stop it. The long term costs overall probably add up to more than the fraud they've stopped. Personally, I'd have thought that leaving the honest people to get on with their jobs with the occasional audit to spot the fraudsters would be a lot cheaper.

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Anonymous Coward

Re: ...This actually how this part of the world works

John Brown (no body) There's quite a lot of that and as far as I can see, not just in the public sector. Laborious and complex time allocation sheets to show that you are working fully during the day, that take longer to fill out than the odd ten minutes a few people might skive if they could get away with it. But which decent management relationships could make irrelevant instantly. Or casual car use mileage claim sheets that are so detailed and cumbersome to complete and return that they cost more in wasted staff time to complete than they save in preventing small amounts of inaccuracy or petty fiddling. And so on.

In all these cases efficient management and trusting staff the is the most cost effective arrangement. It's just one that bean counters don't understand. I did once come across a case of real fiddling, in the office next door to us. But the very junior staff member who had been doing the fiddling had been left to it by his rather senior manager who had never bothered to check the expenditure and the purchasing orders he was authorising.

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Enough is enough...

It's time that we faced the reality of the nonsense and chaos that's going on and cancelled our exit from Europe (the stupidly-named "Brexit"). It's clear to the meanest intelligence (now)* that it's going to isolate us in our nice little poorhouse ghetto - such a pity that the double-first graduate who got us into this mess couldn't specify a minimum 60% agreement to exit rather than the unbelievably stupid 50/50. Duh.

* And I say "now" because it was mean intelligence (i.e. morons who hadn't a clue what they were voting for, as in "I didn't want to support Cameron") that got us into this appalling mess.

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Happy

Re: Enough is enough...

Cheer up man, this article clearly shows there are winners too in this Brexit malarkey.

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Happy

Re: Enough is enough...

You may have gotten things a little muxed ip.

Not supporting David Cameron was always evidence of the existence of intelligent thought, rather than proof of its absence.

LOL.

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Facepalm

The sector that paid the highest average margin in 2016 was the NHS

I can't get my head around this. Why does an organisation that rivals the PRC Army in size pay over the odds for everything, especially drugs? It should have massive purchasing power.

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