Church of Scientology: 385% Profit Margin on E-Meters

The dishonest and greed-driven Church of Scientology purchases dubious “experts” as needed to bolster its phony claims. For instance, the late Colonel L.  Fletcher Prouty took a big Scientology payday to argue that L. Ron Hubbard’s military records were “sheep-dipped” and that Hubbard had actually won 27 war medals including two Purple Hearts. The fact is that Hubbard never saw one day in combat and was never wounded in combat. Aside from his mere assertion that Hubbard’s records had been sheep-dipped, Prouty absolutely failed to ever produce even one shred of evidence to back up his opinion concerning Hubbard’s military records. To give the reader an idea of the profundity of Prouty’s larger intellectual deficiencies, he denounced both Evolution and Heisenberg’s uncertainty principle as being amongst, “the greatest propaganda schemes ever put forth by man.” This can be found in Prouty’s controversial book Beyond Our Consent, Secret Power, Deception, Abandonment of Freedom in America.

The Church of Scientology has also funded, sponsored, entertained, cajoled, or otherwise persuaded certain credulous and weak-headed religious scholars to turn a blind eye to Church cruelty and greed in favor of embracing a dubious construct called New Religious Movements. This flawed construct favors cults at expense of their victims. These religious scholars have written sanitized fantasies defending Scientology as a valid new religious movement. The erstwhile Scientology crypto-apologist J. Gordon Melton certainly comes to mind as the foremost member of this class of pliable religious scholars.

When the Church of Scientology was working to get tax exemption from the American IRS,  it hired several commercial pricing experts to comment on its pricing policies for its books, meter, and jewelry. This was necessary to rebut the IRS’ claim that the Church’s pricing structure was purely, and only, designed to obtain maximum profits on everything it sold: Books, meters, jewelery, and services.

These pricing experts were then quoted in the written pre-exemption responses the Church furnished in response to hundreds of IRS questions.

In what is a completely bizarre comment shown below, pricing experts Dudley Smith and Cruzen Alexander evaluated e-meter pricing and concluded that  the Church’s 385% price mark up over the manufacturing cost of the e-meter was acceptable. Said another way, the Church of Scientology has a 285% profit margin on e-meters. Note: there is a difference between a price mark up and profit margin. Please click here for more information.

Meter.PricingIn my three decades of corporate sales and management, I never once heard of an astonishing 300-400% price mark up over the manufacturing cost of an item. This would be like manufacturing an item for $100.00 and then marking it up to a sales price of $500.00.  Unless one has an unchallenged monopoly on an item, the simple fact of competition will not allow an exorbitant 400% mark up on any item, particularly given the fact that global manufacturing capacity far outstrips demand in virtually all manufactured goods. A more typical mark up for an item that costs $100 to manufacture would be to use a 100% mark up. In this case, the sale price would be $200 and the gross profit would be 50%. This would allow a steeply discounted sale price of $150 to yield a very healthy 33% profit margin — and this was what the entire pricing exercise was designed to do: Trick consumers  and end users into thinking they got a smoking hot deal at 50% off list.

The facts are blatant: The Church’s monopoly on its e-meter allows it to demand an obscene 285% profit margin on the retail price of its e-meter. In my opinion, the Church’s so-called pricing experts appear to have used 1950’s pricing models in which unrealistic pricing mark ups were used only as the price from which to begin discounting. This was a stratagem or a ruse designed to allowed sleazy companies to offer what appeared to be very steep price discounts. In actuality, it was usually an attempt to use cheap flattery to convince customers into thinking they were receiving an enormous discount because they were so important. The ridiculous and irrational pricing structures of the 1950’s have all been replaced by consumer contracts of adhesion laden with dishonest and deceptive small print, the net effect of which is to massively price gouge customers by locking them into sleazy contracts for 2-3 years. Think cell phone and credit card contracts.

After admitting to the IRS that it takes a monopolistic and extortionate 285% retail profit margin on the very e-meter required for spiritual salvation in Scientology, the Church then takes a great deal of pride in noting that IAS members pay 20% less for the meter. Imagine the nerve of the Church of Scientology: IAS members are price-gouged for a 208% profit margin on the meters necessary for their spiritual salvation. My thinking is that the profit margin on the new Ultra Mark VIII is even higher.

Shown below, the 1993 filing offers a cost breakdown of the e-meter. This breakdown nicely confirms Marc Headley’s estimate that the Mark VII and Quantum e-meters cost about $400 each to make at Golden Era. This cost breakdown further shows  a royalty of $426.10 taken on each meter. Again, this is pure greed and hypocrisy: Given that L. Ron Hubbard donated all of his works to the Church, why must a royalty be taken by the Church on anything Hubbard donated?

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Supporting document from the Church of Scientology’s 1993 submission to the IRS. This section of the document discusses Church pricing and profit policy on books, meters, and jewelry:

5 comments

  1. I wonder what Volney Mathison, the man who developed the E-Meter, would say on current prices. How religious!

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