Marginal Revenue - MR

That laaaaast dollar. The laaaaast sale of a sundae at Baskin Robbins before the year closes at midnight on New Year’s Eve. It’s that laaaaaast flying car sale.

You made it at 11:58 pm as the ball was dropping in Manhattan.Sold it for 100 grand even. Felt different from the first car you sold this year. Why?

Because it had already been built, shipped, prepped, painted with that New Flying Car Smell...smell. And the revenue it generated was likely meaningfully more profitable from an accounting perspective than the first car sold.

Why?

Because so many of its costs had already been accounted for, or paid for, on the books. That factory that stamped out its last product for the year already had a year’s worth of high use behind it, amortizing the cost of the factory, and everything that went into winning that last marginal dollar of revenue, so that, from an accounting perspective, to make the first sale of that flying Tesla for 100 grand...cost Elon and company a billion dollars.

But to make the millionth Tesla and sell it for 100 grand, as it was completely made by robots, cost Elon and company only 20 grand. The key concept to worry about when you think about marginal revenues is the marginal contribution to profits, which that last dollar brings to the bottom line party.

Anyway, we hope you got something out of this video. It’s probably one of the last ones, not made by robots...