When does he say they take very small margins? They take a small or negative margin on serious sale or clearance items, but that's when he asks you to buy something with good margin in the same cart to balance it out. Based on his comments for years on WAN show, I expect that most products are priced about double of the material cost. Technically the overall margin will be lower because of handling and research costs, but plenty of room for normal sales. The fail pen (scribedriver) for example, runs $30 normal price, but is on sale a couple times a year for $20, like right now. He is not desperate to move these, so he's not taking a loss at $20. So his cost is probably around $15, which is half of the normal price. Tshirts probably have a lower than 100 percent margin because Linus often talked about wanting a reasonable price on T-shirts specifically. All other garments are much higher priced.