In this example, you have a 100% markup.Īs with margin, your markup is typically expressed as a percentage, so in this case, it would be 100%. Returning to the same example, you bought pots for $40, including labor costs, and are selling them at $80 apiece. Since Price – Cost is also the Profit, another way you can express retail markup is: Margin is typically written as a percentage and represents the amount of profit you make on every dollar in a sale. In this case, the margin for your pots is 50%. For example, let’s say you bought pots for $30 each plus $10 in transportation and labor costs. Price refers to the sale price of an item, and cost refers to the COGS. Retail Margin Formulaįor a better understanding of the math behind your margin, refer to the following formula: In other words, margin is your revenue minus all the money you have spent on acquiring and managing your inventory. This includes all labor, transportation, storage, marketing, and unit costs. Retail margin refers to the selling price of an item minus all the costs associated with that item-known as COGS. Let’s take a deeper look at what margin and markup mean, how they are calculated, and the ways that you can use them to run a successful retail business. Although both margin and markup calculations take into account the same metrics, cost and price, they are not interchangeable.
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