Profit-Margin Ratios in our industry?

[whizard]

I've been reviewing the past year, and have been trading in this industry for 10 years.

The cost to company of power outages, ever increasing cost of sales etc, that we have all faced this past year etc. The cost of an auditor alone (required by law) - in my company's case - went up with 35% this past year (all ads to cost of sale).

Cost of ESKOM outages: http://mybroadband.co.za/vb/forumdisplay.php?f=163

In the IT industry we all rely on imports. Because simply put - the cost of trying to build the same products locally is simply not viable...I'm not talking about assembly of imported components.

Just how viable has this industry really become, is it really still viable?

The speed and standard of internet access decreases all the time and cost of services like hosting keep on climbing. Fraud is rife, and this has its own additional cost.

So, what do you perceive as a realistic profit margin for our retail IT sector in 2009. Has our industry become part of a surplus economy...?

Not being despondent but I am curious as to your perceptions in this regard.

 

[sox63]

I've been reviewing the past year, and have been trading in this industry for 10 years.

The cost to company of power outages, ever increasing cost of sales etc, that we have all faced this past year etc. The cost of an auditor alone (required by law) - in my company's case - went up with 35% this past year (all ads to cost of sale).

Cost of ESKOM outages: http://mybroadband.co.za/vb/forumdisplay.php?f=163

In the IT industry we all rely on imports. Because simply put - the cost of trying to build the same products locally is simply not viable...I'm not talking about assembly of imported components.

Just how viable has this industry really become, is it really still viable?

The speed and standard of internet access decreases all the time and cost of services like hosting keep on climbing. Fraud is rife, and this has its own additional cost.

So, what do you perceive as a realistic profit margin for our retail IT sector in 2009. Has our industry become part of a surplus economy...?

Not being despondent but I am curious as to your perceptions in this regard.

I dont know if maybe this is the right section for this topic, but I will add my 2c anyway.

I'm not in the retail IT side of things but, generally margins are being eroded to such a point that it is not becoming viable for small to medium operations and sadly that is just the way things are.

And though you mentioned that costs going is the main reason for this, I disagree to an extent. The reason IT companies do not make as much money as they used to, is simply becuase users are a lot more educated in the options that they have. They can go direct, buy from a online retailer, or kit gets bundled with some other service they are looking for.

And becuase the customer now knows all of this, they play suppliers off each other, trying to get the best price for them, and that is not a situation you want to find yourself in.

The key IMO, is not to compete on price alone, but to offer some other "value-add"(there is that buzz word again).