Chapter 59: Jack is stupid…

(Even if something confuses you, please read it till the end.)

This is about the deal with the Guild Master in chapter 5 and 6.

Understand this:

1. There are two types of profits: gross profit and net profit.

2. There are two types of expenses: manufacturing expenses and office expenses.

When a product is manufactured, it isn’t as simple as a $10 product, when sold at $15, $5 will be the profit earned. That $5 is a gross profit. There are then management, marketing, sales, and distribution expenses. They aren’t direct expenses but indirect ones as they are not directly incurred on a single product but as a whole.

So, when calculated per unit expense, let’s say it costs $3 per unit. Then whatever profit remained (gross profit $5 less $3 office expenses = $2) will be the net profit. This is the actual profit earned by an organization. This profit will then go to the business (if reinvested) and to the shareholders.

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B) How a contract is formed:

We aren’t talking about legal requirements but the motives of the parties. Both parties will form a contract only if their motives are fulfilled. In this case, it’s profit.

1. So if Jack had asked for more than he had, and if the guild (not Albert) couldn’t find profit in it, it would rather not form a contract. It would be better off continuing with its old way.

2. About monopoly. First, understand what it is: When one has complete control over an industry or service. This means that there are no competitors.

Jack has competitors! Because in a monopoly, there should be a unique product that no one has. That’s not possible in real life as products will have similarities, and that can’t be avoided.

So Jack can’t monopolize the market!

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C) But he can have the highest purity, so can’t he monopolize?

No! That’s not a monopoly! That’s monopolistic competition! He can compete monopolistically with other purifying businesses, but he can’t monopolize the market!

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D) How much does the guild earn?

Let’s say the guild purchases beast cores for 1000 coins and expends another 500 coins on them to purify them. Then the cost of those cores has now increased to 1500 coins. Since they are purified, they can be sold with a greater profit. So let’s say it can sell them for 2500 coins and earn 1000 coins as profit, right?

Wrong! This is just the gross profit. There will be sales and distribution expenses further which include transport expenses as well. In addition, there will be market price fluctuations! So the profit will be uncertain.

So now, let’s say the guild paid another 500 coins as distribution expenses. Now the profit remaining is the net profit, which is 500 coins. This is the actual earning of the guild.

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E) Jack entered:

Now Jack is going to do the work of purifying businesses. The guild had spent 500 coins on purifying previously. So that means it has the capacity to spend the same on Jack.

But Jack can do that for free, without additional charges. This means the guild will directly earn 1000 coins as net profit!

But as Jack has demanded, it will pay 30% of it, which will be 300 coins. It will still earn 700 coins as net profit rather than 500 like in the previous example.

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F) Doesn’t that mean that Jack could’ve asked for more?

Right, he could’ve asked for 50% (500 coins) and the guild would’ve profited the same as previously.

Now tell me. Since the guild would’ve profited the same, why would it establish a transaction with Jack?

It won’t! It will require a concrete reason to do the transaction with Jack. And the additional 200 coins is the concrete reason!

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G) Doesn’t Jack have higher refining quality than any other refiners?

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Yes. But the guild will have to consider if it actually matters considering the profit.

The highest rank of the core the guild can collect will be B rank as there are only B rankers in the guild. The B ranked cores are small-sized, lemon-sized. They can’t be used to create a magic staff. At most, they can be used as batteries. So the guild can’t flaunt its purity to anyone as it won’t be a significant difference. They aren’t playing lemons!

It will surely make a difference if the core is an S-ranked. And the difference would be significant as it will be used for creating a magic staff.

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H) My mistake:

I mentioned 200% when it actually should be 100%. How will the purity exceed the physical limit? The physical limit of anything is 100% and it cannot be exceeded.

So I ask for your forgiveness for this. I’m still a newbie, and I tell you, there will be a lot of mistakes in the future as well!

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I) Jack’s mistake:

He could’ve asked for 50% and see how it goes. Then the guild master could’ve come to 40%. He can’t ask for more than 50 as the guild won’t do the transaction in loss, obviously. The guild won’t agree even with 50% as it won’t have a profit.

But Jack (and me) asked for 30% as I didn’t know how the other things worked. I didn’t know about that world's market and what additional costs are involved.

********From the blogs and youtube videos on writing, I had learned not to make an MC perfect as he wouldn't be relatable in that case. It was mentioned to show the MC making mistakes. That’s what I did, but it turns out that the readers here want a perfect MC.********

I was trying to make the MC make mistakes and learn from them. This way, the character will develop and become smart. But it turns out that it was my mistake considering how much criticism I got.

I'm still following the advice on youtube and blogs! But I think they talk about other audiences, while the Webnovel audience is different.

That's where I saw the difference and made mistakes...

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***If you call the MC stupid, it means you are calling me one! I won’t deny, but you should at least not tell me, right? It hurts you know!***

Instead you can tell me how I can improve…

But no. They just spew out their anger as if I have cuckolded them!

I don't even know how much of my self esteem has remained by now…

I think it will soon diminish! XD

Now, I think whatever I think will turn out to be a mistake in the future... I don't have faith in myself anymore...

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I was trying to make everything as simple as possible so the readers can understand. That's why I didn't drag their conversation and made it simple.

But if I must make it complex, then I will, from now on…

Feel free to point out if I missed something and the mistakes...

 

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