Finally, most of a company’s operational challenges scale based on revenues or unit sales volume, not gross margin. If you have a million customers who generate $100 million per year in sales, the cost to serve those customers doesn’t change whether your gross margin is 10 percent or 80 percent; you still need to hire enough people to respond to their support requests. But it’s a lot easier to afford good customer support when you have $80 million in gross margin to spend rather than $10 million.
