Marginal Profit

See: Margin. See: Profit.

The marginal flavor of profit is the profit contribution on that laaaaast item sold. Like...in order to sell a tube of toothpaste, you need a factory to make vats of soapy stuff. And packaging, i.e., the tube. That factory costs a ton of dough to build, right? Millions. Say it's $20 million. So if you sell one tube of toothpaste, it cost $20 million plus the cost of the vat and the packaging and so on. But if you sell 20 million units, well then all of the infrastructure and everything else to spit out those tubes is "paid for." Then the marginal cost of that 20,000,001st tube is really just the cost of the goop inside and the packaging. Maybe a nickel? Something like that. So if that 20,000,001st tube sold for $3, then its marginal profit was a whole lot more than what the first one contributed.