A DUH moment for TinytotThis is only about the specials.
For a brain laxative, assume a 50/50 split.
Assume we win the specials with a bid of $10.
We pay DeBeers $10, and they give us back $5.
We each paid half of their cost of production, so we can cancel that cost out and forget about it.
So forgetting about COP, DeBeers made $5 on the specials and they cost us $5.
Now if we can sell the specials for what we paid for them, which was $10, we will make $5, and break even with DeBeers.
If we can only sell the specials for $9, we will make $4, and DeBeers will have been the winner.
If we can sell the specials for $11, we will make $6, and it will have been a good deal by $1.
Interesting that if we can only sell the specials for half of what we paid, or $5, we will not lose on the sale, but DeBeers will be way ahead.
So what this tells me is that if we can sell the specials for as much as we paid for them, winning the bid was OK, and not a losing proposition. DUH, DUH, DUH.
That obvious point being said, we still need to know how much we paid for the specials AND how much we sold them for, before we can judge whether or not our bid was a smart/profit-maximizing one.