I was trying to understand the concept of the business model of Kingdom Of Loathing
They were doing stuff like selling T-shirts and cups, so basically I was wondering what are the benefits for going this model for a small website?
For one thing, assuming the first batch they purchase was 1000 units of cups and adding shipping cost and stuff each cup may cost them $1.50 (let's use the cups as example).
Adding overhead cost and everything else, the first batch may cost up to $4000.
In other words, they have to sell at least 400 units of cups to break even. Am I misunderstanding something?