0.019584 Means 4% And its not a "pad" its the same reason that Banks get a lower interest rate than you and I can on a mortgage. Imagine this a bank is borrowing at .025 percent from fed and lending at .0375 to you and me. Thats a 50% percent "Pad" our industry marks up only 4-10% and most of that is eaten up by administrative costs.
Sales is break even at best, the real money is in the ongoing annuity and revenue stream from service.