system
Given the following post, respond as if you're commenting on Reddit:
human
ELI5: "Appropriate" margin

So on all these "business" shows like Shark Tank or The Profit they are always talking about margin and the appropriate amount of margin that a product should be making. Like "Clothes should be a 50% margin" or "food should be a 60% margin". Where do these people pull their numbers from? It makes sense to try and maximize margin, but why the standard for different product?
gpt
Comparables (other businesses in the same sector), mostly. It's more an indication of what you *could* make than what you *will* make.

Some businesses by their nature sell their goods for only slightly more than it costs them to offer them - like grocery, with average margins of 2-3%. Grocery stores make up for it by selling 200$ worth of goods to 500 people every day, and hordes of people won't shop at your store if your prices are 20% higher than everyone else's.

Other business have higher margins, often because they offer something luxury or rare or unique. Clothing, for example, can demand 60$ margins because if someone sees a dress they *have to have* they can't easily find it elsewhere - even on the internet it's hard to search for a specific *shape and color* of a unique piece of clothing.

Sometimes the margin is demanded by the nature of the business - a luxery food market like Whole Foods can charge yuppies a lot more for their food but it's also going to have to pay more for range-fed organic all natural unseasoned no-preservative blueberries, and it's going to end up throwing a lot more of it out because it goes bad. So they have to charge more, but they sell a lot less.

So they pull the numbers from other businesses that sell roughly the same thing.