Do you want to start a business selling products or services with high ROI? If YES, here are 50 best successful business ideas with high profit margin.
Business is tough, and it is a fact that a lot of businesses and even industries struggle to break even, but there are some exceptional businesses and products that came in and took the market by storm. These businesses and products have not only carved a comfortable market niche for themselves, but that they also operate with really high profit margins. We have listed below businesses and products that have been discovered to operate with high profit margins in the market.
Successful Business ideas and Industry That Sell With High Margin
It can be seen that a number of the most profitable industries listed here provide services rather than sell products. This invariably means their operations don’t require significant capital investments or major investments in raw materials–which is good news for the average entrepreneur who can’t afford to invest millions in a startup.
Sageworks analyzed data from thousands of private company financial statements and used net profit margin as the metric to rank these industries. These are the most profitable industries in the United States according to new ranking by Sageworks, a financial information company.
- Financial services
The financial industry comprises of accounting, tax preparation, bookkeeping, and payroll Services. This sector is in constant high demand and its services are even said to be doing well even if the economy isn’t. According to 35.7% of respondents to the World Wealth Report, this is one of the sectors producing millions.
A consistent demand of services and low overhead costs have pushed accounting and tax preparation to the top of this year’s list, increasing from a revised 16.3% profit margin to 19.8%. This industry sector also appeared as #20 in Sageworks’ list of fastest-growing industries in the previous year.
2. Legal Services
Legal services is also among the high rising industries that operate with high profit margin. It finished last year with a profit margin of 18.3% but fell down to second this year with a 17.8% margin. Despite the small dip, the industry’s overhead costs remain low. There’s little need for heavy investment costs, other than salaries, and demand is constant. The limited overhead cost is one of the reason for its profitability.
3. Oil and Gas Extraction
Oil and gas extraction maintains its third place spot as America’s domestic production of oil and shale gas continues to increase and energy imports decline. The profit margin increased from 15.1% to 16.4%. Considering that this industry is quite capital intensive and operates with a lot of entry barriers, it is doing pretty well in the market.
4. Commercial and Industrial Machinery and Equipment Rental and Leasing
The machinery and equipment rental industry returns to the list, jumping from 13.4% in previous rating to 16.4% now. The industry was also listed as No. 16 in Sageworks’ list of fastest-growing industries. With several of the high margin industries related to real estate, the industry may be growing due to more home construction.
5. Offices of Dentists
Office of dentists is another business that is tipped as operating with high margin. A service that everyone is encouraged to take part in twice a year, dentistry returns to this year’s list. Profitability increased from 12.7% to 14.9%, perhaps due to more demand as the Affordable Care Act supports more insured citizens.
6. Commercial Leasing
Rounding out last year’s list with 10.4% growth, real estate leasing is seen to have jumped to 14.1%. The return of the housing market supports a decline in vacancy and, therefore, more business for landlords, who can begin to increase rental rates. More than three-quarters of companies in the commercial leasing space have five or fewer employees. IBISWorld says as of 2016, industry profits averaged 52.7 percent
7. Offices of Physicians
Physicians win out over other health practitioners this year, with a profit margin up to 14.1% from 12.2%. Similar to the consistency behind dentistry, physicians are in constant demand, supported by an even better-insured population.
8. Offices of Real Estate Agents and Brokers
Real estate agents and brokers were No. 1 in Sageworks’ report of the fastest-growing industries with a sales percent change of 23% over the last year. They return to this year’s list of the most profitable to 14.1% profit from 11.6%, a clear indication of the housing market’s return.
9. Offices of Other Health Practitioners
Health practitioners is a constantly demanded industry, and they add to the list’s dominant health care sector. Profit margins remained steady, 12.6% from 12.5% last year, but that’s enough for a valuable profit and a tie on this year’s most profitable list.
10. Outpatient Care Centers
Outpatient care centers joins as the list’s fourth industry related to health care and the only one that experienced a decline in profit, from 13.8% to 11.7%. While outpatient visits may be on the rise, providing cheaper options than hospital stays, costs may have risen that affect the industry’s bottom line.
11. Other Schools and Instruction
This industry sector includes fine arts schools, sports instruction, language schools, exam prep, automobile driving and other more specialized schools than last year’s inclusion of colleges, universities and professional schools. A decline in overhead costs appears to be one of the main forces bringing it to the list and helping its profitability status.
12. Death Care Services
Another newcomer, death care services, has been included to the list of businesses that operate with high profit margins. This industry includes undertakers and funeral homes, and they add to this year’s list with a profit margin of 10.7%. This industry is another with consistent and increasing demand and low overhead.
13. Support Activities for Mining
Profit did dip for mining services, from 12.0% to 10.5%, but it still managed to round out this year’s list. Sageworks analyst identified a slight increase in overhead costs, but the demand for domestic exploration for minerals and oil and gas extraction supports a continued profit.
Successful Products That Sell With High Margin
While the accepted retail markup for most items is around 100%, there are some products that go a lot higher. Common items like printer ink have a markup of 300%, while text messages get marked up to nearly 6,000% more than they’re worth. Some of the products that have been discovered to sell with really high margins include;
A majority of Americans now own smartphones, according to Pew Research Center. Last year, 45% of all smartphones sold were iPhones. The iPhone is one of the world’s most profitable products and a primary driver in Apples’ financial success.
The company’s fiscal 2013 sales increased by $14.4 billion, or 9%, from the year before. Much of the growth was due to strong iPhone 5 sales, as well as the successful introductions of iPhone 5S and lower-cost 5c. Net sales of the iPhone totaled $91.3 billion last year, up 16% from 2012, when sales increased by more than 70% from the year before. Interbrand named Apple the world’s most valuable brand last year.
- Operating margin: 41%
- Product revenue: $91.3 billion
- Market share: 45.0%
Despite a massive decline in American smoking habits since the 1960s, Marlboro cigarettes are still among America’s most profitable products. Altria Group, Marlboro’s parent company, shipped roughly 130 billion packs of cigarettes last year, including 111 billion packs of Marlboros, down slightly from the year before. The Marlboro brand, however, still dominates U.S. tobacco markets, controlling more than two-fifths of the tobacco market in America.
The brand has been the top-selling cigarette nationwide for the past 35 years. While smoking is on the decline, the Marlboro brand can be found on a variety of smokeless tobacco products. Altria Group shipped 787.5 million units of smokeless tobacco products last year, up slightly from 2012.
- Operating margin: 32%
- Product revenue: $18.7 billion
- Market share: 40.3%
Like several other energy drink brands, Monster has come under some scrutiny for its brightly colored labels and flashy advertising, because such tactics tend to attract a young audience. One can of Monster has roughly five times the caffeine found in a can of Coke. Monster does not allow children or pregnant women consume its products. Despite bad press, Monster Beverage Corporation’s revenue has steadily increased in recent years. Sales rose more than 9% last year.
- Operating margin: 26%
- Product revenue: $2.1 billion
- Market share: 34.6%
4. Harley-Davidson Motorcycles
The 100-plus year old Harley-Davidson, Inc. has built a dedicated community of motorcycle enthusiasts. The approximately 1 million worldwide members Harley Owners Group, which the company introduced in 1983, promotes sales, events, rallies, and bike trips.
Perhaps as a result, Harley-Davidson is among the world’s 100 most valuable brands, according to Interbrand’s 2013 report. The distinctive culture associated with Harley-Davidson is widespread beyond the U.S. Nearly 168,000, or 55%, of new motorcycle registrations in the U.S. last year were Harley-Davidsons, according to the company.
Revenue at the company’s motorcycle and related products segment rose 6.4% last year from $4.9 billion to $5.3 billion. In addition to selling motorcycles, the company also services vehicles and provides financing, which help bring its company-wide operating margin up to nearly 20%.
- Operating margin: 17%
- Product revenue: $4.1 million
- Market share: 54.9%
Enfamil is one of the best-selling infant formula brands in the world. While it trailed Abbott Laboratories’ Similac brand in market share, the company claims to be the number one formula brand recommended by pediatricians. The company reported net sales of $4.2 billion in its most recent fiscal year, with Enfamil sales accounting for a large portion of the sales.
Although a declining U.S. birth rate has raised some concerns about growth, the company continues to expand its presence in emerging markets and makes more than half of its revenues in Asia.
- Operating margin: 24%
- Product revenue: $2.0 billion
- Market share: 40.0%
The Coca-Cola Company’s total revenue dropped 2.4% last year, as consumers’ preferences continued to shift towards less sugary, healthier drinks. Even with these developments, however, Coca-Cola remains the dominant player in the soda market. The 128-year-old company controlled 36% of the U.S. market in 1977, and 42% last year. Coca-Cola distributes more than 500 different beverage brands around the globe.
In all, the company and its numerous bottlers sold a total of 28.2 billion unit cases of Coke and other beverages in 2013, up 2% from the year before. As of 2013, Coca-Cola trailed only Google and Apple on Interbrand’s list of the world’s 100 most valuable brands.
- Operating margin: 24%
- Product revenue: $13.7 billion
- Market share: 42.4%
7. Jack Daniels Tennessee Whiskey
Jack Daniels is the top-selling American whiskey, and one of the largest spirits brands in the world. It is also Brown-Forman Corporations’ principal product, and its biggest driver of growth. Although branding for Jack Daniels has often invoked the company’s Southern heritage, the drink is popular worldwide, having benefited from rising whiskey demand overseas.
According to Advertising Age, an increasingly large proportion of Jack Daniels revenue comes from international sales due to a recent bourbon boom. Jack Daniels is sold in a number of different variations, including Tennessee Whiskey, Single Barrel, Ready-to-Drinks, Tennessee Honey, and Winter Jack.
The company reported net sales of $3.9 billion in fiscal 2014. Jack Daniels’ popularity domestically and abroad is largely the driver behind the company’s continued growth, according to Brown-Forman. Operating margin: 25%; Product revenue: $2.0 billion; Market share: 2.4%.
Depending on the seller, be prepared to pay at least 50% and as much as 200% over the appraised value of a diamond. There are several reasons jewelry can be so expensive. There are the costs associated with the mining and extraction of the precious metals and gems that are used.
There is a transportation overhead to consider and the expertise of craftsmen. The jewelry store, located in a high-rent mall perhaps, has to hire staff and pay utility. When it comes right down to it, though, diamonds and other jewelry cost so much because they are quite nice and shiny.
9. Coffee and tea
American’s love coffee and adore tea so much that they are willing to pay. A 100-count box of Lipton Tea can be had for about $5.99, roughly 6 cents a serving. Nevertheless, coffee shops and restaurants charge anywhere from $1 to $3 for a cup of hot or cold coffee or tea, and even more for specialty brands or herbal varieties.
Coffee prices can fluctuate due to the volatile commodities marketplace, but a decent cup of java will still only cost about 50 cents to make at home, while the average Starbucks, Peet’s or Dunkin’ Donuts costs you a $2 to $5 per serving, depending on size, blend and add-ons.
10. Wine and champagne
It should come as no surprise that a good bottle of wine or champagne has its cost multiply as it moves from the vineyard to your table. According to the magazine Wine Spectator, an average restaurant can be expected to charge double for what it paid for a bottle. An in-demand bottle can even fetch a 400% markup sold by the glass.
Liquor sales have always been a money-maker for restaurants, boosting their bottom line in a way low-margin entrees can’t always do on their own. High-end alcohol sales also carry a prestige factor that, in the eyes of many diners, makes up for what they are shelling out.
11. Furniture and mattresses
Furniture stores usually make a hefty margin, with markups of about 80 percent and more. Anyone who has ever shopped for a new mattress can probably attest that finding a suitable one in the $1,000 range takes a fair bit of searching and haggling.
In part, that is because retailers often hike the price tag 100%, and in part, it is a markup used to cover sales commissions. It also gives the needed wiggle room for sellers to deploy a popular tactic — big, colorful signs announcing 30%, 40%, even 50% off. Slight product variations and store-specific brand names make comparison shopping hard to do.
Looking good doesn’t always come cheap. The cosmetics industry is worth $50 billion in the U.S. alone. Like jewelry and fragrances, buyers pay 50% or more over wholesale costs because they have an affinity for a particular brand. The color, style and “label” attached to a particular facial, body or hair product adds as much to the price as the blend of oils, minerals and coloring.
The average markup on cosmetics is 78 percent. Since most cosmetics are made from various combinations of dirt, oil, wax, and fragrance, it’s surprising that shoppers pay such a premium. But thanks to anti-aging claims and celebrity-endorsed marketing, shoppers have been breaking the bank to look younger and more beautiful for years.
13. Movie snacks
The Stanford Graduate School of Business and the University of California at Santa Cruz conducted research into the pricing of movie concessions. Popcorn, for example, often sells at a cost that reflects a 1,000-fold markup compared with the cost of the kernels.
Among their findings were that by charging high prices on concessions, theaters are able to keep ticket prices lower. The researchers also point out that cinemas rely on concession sales to keep their businesses viable. Although concessions account for only about 20% of gross revenues, they represent some 40% of theaters’ profits, they said. While ticket revenues must be shared with movie distributors, 100% of concessions go straight into an exhibitor’s coffers.
14. Bottled Water
Water is indeed everywhere, but people pay through the nose for it. The popularity of bottled water has meant windfalls for the big three of its industry, Nestle, Pepsi (PEP – Get Report) and Coca-Cola (KO – Get Report), as well as for brand names such as Poland Spring, Fiji Water and Evian.
By comparison, tap water costs about $0.002 a gallon; bottled water sells at around $2 for a mere 16 ounces. A big part of what accounts for the markup is that, according to Food & Water Watch, an advocacy group for affordable food and water, more than 17 million barrels of oil are needed each year in the U.S. to make all those plastic bottles.
The bottled water industry has passed milk, coffee and juice in number of gallons sold, putting it behind only beer and soda, according to the Columbia Water Center at Columbia University.
Bottled water volume declined by 1% in 2008 and by 2.5% in 2009. Bottled water wholesale dollar sales in the U.S. first exceeded $6 billion in 2000 and by 2007 topped $11.5 billion. But category sales declined to $11.2 billion the following year and to less than $10.6 billion in 2009. Despite all, BMC estimates that, on average, Americans still drink nearly 28 gallons of bottled water a year.
15. Printer ink
The ink and toner you need to keep your computer’s printer from being more than a paperweight is among the costliest substances you can buy — many times more expensive than gold, champagne and gasoline.
Why so much? Printers share a common trait with video game consoles. Printers may not have high-end graphics chips and the like driving up their baseline, but the ink they require nevertheless comes at a huge premium. The website DataGenetics crunched the numbers and came to a shocking conclusion: Assuming a cartridge sells for $16.99, the 19 milliliters of ink it contains amounts to nearly $65,000 a gallon.
16. Designer jeans
A $665 price tag on Gucci jeans and $225 for Sevens proves some shoppers are willing to go to great lengths for fashion. But these designer items are grossly overpriced. According to The Wall Street Journal, it costs about $50 to make True Religion’s best-selling jeans, Super T Jeans, but the wholesale price reaches $152 and the average retail price is inflated to $335.
Some of the world’s most expensive handbags include a $3.8 million purse made by The House of Mouawad in Dubai that’s adorned with more than 4,000 colorless diamonds and a $1.9 million Hermes Birkin bag. Women are said to own an average of 10 handbags and spend an average of $148 on a handbag “splurge,” according to a ShopSmart poll.
18. Text messages
Outgoing text messages on a cell phone can cost the provider three-tenths of a cent, but users pay up to 20 cents – that translates to a 6,000 percent markup. Some plans charge 10,000 times more for sending a text than other types of data.
19. Mobile Gaming Controllers
Mobile gaming is going crazy. In fact, over 60% of Americans will play games on their mobile phones in 2018. This is just the beginning of mobile phone gaming accessories. 2018 is the year to break into the market early. These controllers will take your customer’s mobile gaming experience to the next level. You can expect every hardcore gamer to pick these up at some point, and this is the reason for the high margin in the industry.
20. Wearable Devices
Wearable technology is one of consumer’s favorite categories for 2018. Smart devices are no longer a luxury good only available to people with enough money to try them out. They are the norm now. This means huge demand and big margins for resellers. According to Forbes, analysts forecast that suppliers will ship 125.5 million wearable devices this year. Up from 104.3 million in 2016, and that the total will hit 240.1 million in 2021.