Extrem undercutting?

[Conradus]

In a fair market, a producer will look to make 25-50% of the item's value back as profit. This is including labor (which is harder to quantify given everyone has their own idea about what labor is "worth").
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In a fair market, a producer will look to make whatever he can get somebody to pay for his product. Sometimes nobody will pay enough to cover his costs, either because he is inefficient or just because nobody wants it. He is not guaranteed any kind of return at all; it's his business to set it up so that people will pay him for his product.