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.
Retail Markup Formula
To find the retail Markup amount in dollars: Retail Markup = Sales price – Cost
Retail Markup Calculation
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.
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