How much profit do the scrap yards make per pound? - Page 2

There are a lot of posts in this thread that are misusing the terms profit and margin.

Margin is the percent difference between what the yard pays per lb and what they sell per lb.

Profit is the percent of the margin they have left after all expenses.

A well run efficient yard can operate on a smaller margin (offer you more) and still make a better profit than an inefficient yard in most cases.

Small yard i deal with says he is satisfied with 1 cent per lb profit on shred....does this sound correct?

Originally Posted by APA

Gross profit or net profit? There is no way a yard can servive on 1 cent gross profit.

I could only assume this is what the "pure profit" is after all the bills are paid.........still seems a bit low in my opinion

Even at net is seems low, but if it is the pure profit at a penny per pd. it would be worth it. If a gondola car can haul 75 tons or 150,000 pds @ .01 equals $ 1,500 per car. So after paying depreciation, wear and tear on equipment, providing employees with pay, ins., SS, etc. paying for hauling trash, interest on loans, taxes, as well as consumables the company makes $ 1,500 per load. Assuming this is a 3 million dollar facility (strictly arbitrary) selling one car of scrap per day provides a return on investment of 18%. $ 1,500 x 365 / 3,000,000. This would be after all expenses. Six year payout. Now as a devil's advocate, I doubt their margin spread is this tight.