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What percentage of the cost of sub-contracting contributes to the end price?

Posted: 2012-02-27

Full Question

If you place an order with a supplier and they subcontract that order to another Chinese supplier, what percentage of the cost of sub-contracting contributes to the end price?

Answer

Subcontracting does not add any costs. On the contrary, the supplier subcontracts to others at lower cost and the remaining part is the supplier's profit, and the total price does not change from the buyer's perspective.

For example, if the order is $100, it matters not to the buyer if the subcontractor is charging $1 (supplier's profit is $99) or $99 ($1 profit for the supplier), the buyer just needs to pay $100.

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