Markup Definition

Markup Definition

See Also:
Retail Markup Example
Margin vs Markup
Buyer Bargaining Power (one of Porter’s Five Forces)
Supplier Power (one of Porter’s Five Forces)
Free Cash Flow Analysis

Retail Markup Definition

Retail markup is the difference between the price of a product and the cost of that product. Retail markup percentage is the retail markup as a percentage of a product’s unit cost. This method is commonly used to find the price of retail products which are somewhat of a commodity. Costs are fixed, and the market dictates purchasing price. Furthermore, many industries have a standard retail markup percentage which most products are sold at.
The retail markup definition is common to many products, services, and industries. Where retail sales are occurring, it is likely that someone used the retail markup calculator. It is important to note that retail markup, margin, and other comparisons of cost of goods sold and price are not the same.
[box](NOTE: Want the Pricing for Profit Inspection Guide? It walks you through a step-by-step guide to maximizing your profits on each side. Get it here!)[/box]

Retail Markup Formula

To find the retail Markup amount in dollars: Retail Markup = Sales price – Cost
To find the retail Markup percentage: Retail Markup = Markup amount / Retail Price

Retail Markup Calculation

For example, if a product’s unit cost is $10 and its retail price is $15, then the retail markup is $5:
Retail markup = Retail price – Unit cost = $15 – $10 = $5
and the retail markup percentage is 50%:
Retail markup percentage = (Retail markup/Unit cost) = ($5/$10) = 50%.
To learn how to price for profit, download our Pricing for Profit Inspection Guide.
Markup Definition
[box]Strategic CFO Lab Member Extra
Access your Strategic Pricing Model Execution Plan in SCFO Lab. The step-by-step plan to set your prices to maximize profits.
Click here to access your Execution Plan. Not a Lab Member?
Click here to learn more about SCFO Labs[/box]
Markup Definition


Does your Accounting Department Produce Net Income?

Coaching the Entrepreneur: Learn how to know what you don’t know. How much should I spend on accounting for my company?     I have been in the accounting profession for 32 years, and for the last 6 years, I’ve owned my own consulting firm to assist companies with accounting challenges. There is one common theme that I

Read More »

Is Mexico the New China?

In the wake of the COVID-19 pandemic and escalating tensions with China, American companies are actively seeking alternatives to mitigate their supply chain risks and reduce dependence on Chinese manufacturing. Nearshoring, the process of relocating operations closer to home, has emerged as an explosive opportunity for American and Mexican companies to collaborate like never before.

Read More »


Financial Leadership Workshop

MARCH 28TH-31ST 2022


Financial Leadership Workshop


August 7-10th, 2023

WIKI CFO® - Browse hundreds of articles
Skip to content