366 billion was Apple’s revenue in 2021.
95 billion was the profit.
A 26% margin.

76 billion was Louis Vuitton’s revenue.
14 billion in profit.
An 18% margin.

41 billion was Pfizer’s revenue in 2019.
16 billion was the profit.
A 39% margin and opted to show 2019, to get a normal year and non COVID year.

These are three companies in different fields, with tech, clothing and healthcare, which all are amazing margins as companies.

12.3% is the average profit margin for companies in the S&P 500, which these three beat.

Comparing that, lets look at lower margin companies.

470 billion was Amazon’s 2021 revenue.
33 billion was the profit.
A 7% margin.

559 billion was Walmart’s revenue.
13.5 billion was profit.
A 2.4% margin.

264 billion was Exxon’s revenue in 2019 “doing pre COVID year again”.
14 billion was the profit.
A 5.3% margin.

26 billion was what Kraft Heinz made.
1 billion was the profit.
A 4% margin.

Looking at this, there’s a clear gap in companies, where higher margin businesses tend to be fashion, evolved tech companies and pharma companies.

On the flip side, retail, energy and food tend to be lower margin companies.

The point to writing this though is figuring out what exactly is the factor which makes some industries and companies generally have higher margin over others.

Best reason is failure.

An example being technology.

63% of tech companies to get a valuation of over 100 million dollars will end up going bankrupt.

That is vastly higher over any other industry for high value companies.

Fashion is another, where 47% of fashion companies to break into retail will be bankrupt in under four years.

For healthcare, the business is also difficult.

2.6 billion dollars is the cost to get a drug passed FDA approval.
Only 12% of drugs make it through approval.
The average time from research to release is 14 years.

This makes healthcare an extremely difficult business.

Comparing that, the lower margin businesses.

Retail, food and energy all are normally easier businesses get into, where they tend to be location based versus skill or IP based.

Walmart scaled up getting the best locations in rural areas and focusing on lower prices via big box stores.
Oil and other fossil fuel products are all over the place and many can compete in.
Food can be produced almost identical to each other with no IP on the products themselves, outside trademark.

Also, for businesses such as Amazon, they have the real estate of time, where they came early to retail, but still have massive competition.

Looking at this, people always talk about profits as this bad thing, really it’s a reward for survival.

Apple survived decades in a market most companies fail constantly in.

Louis Vuitton owns a network of companies that could suffer with a magazine saying they are out of style.

Pfizer is at constant risk of recalls and most of the products they try to launch will never make it to market.

It’s just a reality, where profit isn’t this bad thing and margins were a sign of success in an area others couldn’t thrive in.