How do companies that have crazy return policies and still make a big profit?

don't think out of the BOX, think like there is NO BOX

Profitability depends on lots of factors, some internal and others external. When there is a monopoly and the product elasticity of demand is very low the company can still make huge profits in spite of crazy policies. The electricity providers and telephone service providers are examples of that.

I agree with MR. Tariq Omar

I would recommend you read the book by Jim Collins "Good to Great". I am sure you can find there are many answers to this question

Well , when you get into the actual cost of production , you will come to know actual reason.

The pricing method includes various components , where companies do tweak with pricing and make money.

inflated cost , tweaked pricing, good volume, different tax exemption bye government helps companies to make profit despite having crazy return policy.  

Also those kind of return policy helps a company to be faithful brand and in acquiring new customer , Despite of any crazy return policy , only fewer customers utilizes that benefit.

While planning pricing of a product company do include those loses and returns.      

 

A company will not have a crazy return policy or any policy unless its design to make them money.

 

The product that you returned, the company in turn will send it to the manufacture for a full refund including the shipping and handling charges.

 

Their main reason for this kind of policy is to increase sales; the mathematics behind it is complex but it works, and the profits are guaranteed.

 

Volume transactions and persistent business over the course of at least a few if not many years. That allows businesses to absorb loss against their wholesale cost, if at all.

Thank you for invocation. I agree with all answers.....