Company profits and work tax

Day 3,055, 22:35 • Published in USA Canada • by Ilene Dover



Thanks for the warm welcome you put on in response to my last article. I’m pretty excited to be here in the eUS, that’s for sure.


One of the things I’m more passionate about in this game is making e-money the honest way. Call it weird if you want, but my training grounds are maxed. I’m still 120k strength behind Gnilraps and always will be, until he takes a 4 year break from the game. If I can’t compete in the war module, I’ll find other ways to entertain myself. If you haven’t guessed, I looooove writing articles and the social aspect. I have a soft spot for maths and spreadsheeting as well, so it’s an easy transition into writing about businesses.





One of the first things I did after migrating to the eUS was update my company profits spreadsheet. I’m really happy to share how about I go things. If you already know, skip this bit because it will be boring as!


So, some basic facts. This article (and my calculations) will assume we are producing goods to sell on the market for CC using the work-as-manager function. We are interested in making a profit. The most profit we can for our investment, in fact.


Profit is simply defined. It is revenue from sales less production expenses.


Revenue is easy to work out. Multiply the price of the good being sold by the number of items you are selling. Simples! For the calculations in the next section, I’ve taken the current market prices. Tomorrow they might be different, so follow blindly at your peril.


Expenses are a little tricker. Work-as-manager needs the payment of Work Tax to the treasury. That's a hefty 8.15 CC per company (whether Q1 or Q7) at the moment. Factories need Raw Materials. The exact amount is listed in the wikipedia. Best to look there if you're curious, I don’t like repeating things. Raw Materials cost money... We also need to allow for the cost of 10 energy/company used to work-as-manager. And lastly, VAT must be paid to the government, unless you're selling Raw Materials.


VAT is a little tricker to calculate. It is not a simple case where under a 5% VAT, 95% of revenue goes to the seller and 5% goes to the tax man. Rather, from our gross sales we deduct: revenue/(1 + tax rate).





Putting it all together, we can quickly find out which company will make the most profit. Let’s ignore houses and HRM for the time being, because involving workers makes things more complicated…


Weapons factories



Nothing new there. Low quality weapons factories run at a loss. High quality factories eke out a little profit.


Weapons raw materials



I’m too lazy to name the different company types. A Q3 WRM is an aluminium mine. ‘Nuff said…

No real surprises here either. The more expensive companies make more profit. All is as it should be.


Food factories


Finally we’re getting into something interesting! A Q1 food factory makes 22 CC in revenue, but pays 9.18 CC in taxes?! Ouch…

Other than the Q7 food factory, which seems a bit of an outlier, the more expensive companies make more profit. Seems a bad idea to go all the way to the end though…


Food raw materials



Nothing much to see here either. A word of advice to new citizens though about the Q1 FRM companies that Plato gives for free. In the words of a wise Admiral from long ago: “It’s a trap!” You actually pay more in taxes running these companies than you can make back in sales. Liquidate the company for 750 CC each and upgrade your training grounds instead.





So far all the conclusions are pretty unremarkable. The more expensive companies make more profit. BORING!


But...more expensive companies cost exponentially more to acquire. Say you’ve got 200 gold to burn. Are you better off buying a single Q5 company? Or 20 Q1 companies? To answer that, let’s look at the monthly profit as a percentage of the purchase price for each company. The clever ones out there will know some of the raw materials companies are bought with CC and not gold. I’m going to use the current exchange rate of 1 gold = 420 CC to compare. I’m also going to assume you’re not stupid if you’ve got this far in and will wait for the discount upgrade days...



There you go, the answer to life, the universe and everything provided free of charge. Enjoy!



This bit will be my opinion on our current tax setup. Skip it if you’re only here for the business stuff. Now firstly, I’m not in congress and I’m certainly not a part of the treasury crew. This is my opinion and analysis and only my opinion and analysis.


The profitability of lower quality companies is highly dependent on the work tax rate. Our current rate of 18% seems too high - we’re squeezing out . I’m not just bitching and taking the normal business owner’s approach to taxes. Why?


Work tax consumes almost all the profit of a Q1 food company, and over half the profit of a Q2 food company. The eUS has a few things in common with the real United States. That is, it’s a migrant country. Many of our citizens will have arrived with a suite of companies already built. A 0.27 CC profit in exchange for the 2XP earned for running a Q1 food company is a poor bargain, which will almost certainly result in immigrants not running their low quality companies.


Take a look at this graph. It shows the same monthly returns for food companies that we calculated above (on the vertical axis), but calculated over a range of work tax rates (on the horizontal axis).



If the work tax rate was lowered even a little, to 15%, the profitability of low quality companies improves dramatically. Could this be the first real case of the Laffer Curve in the e-world? In other words, if the tax rate is lowered then more companies will be used. This would increase total tax receipts, despite the lower unit rate.


I can go further if you like. New players that are into the economic side of the game (don’t rant about how that’s a stupid idea, encourage them to learn and explore) are stuck with nowhere to go. There are only one lower price company (the Aluminium Mine) that generates a reasonable profit for the purchase price. Some of the free companies new players get (the Wheat Farm) even make a loss. It isn’t fair to new players to tax them into economic oblivion - the game has a steep enough learning curve as it is.


Food for thought?