While it’s something that every business owner has to do, most are unwilling to share their specific strategies with others. These formulas should be used as guidelines rather than strict rules.
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If you discover that the average markup for your industry is, say, 93.76 percent, feel free to round up or down. Keep in mind that you don’t have to be that precise. Multiply $10 times 1.919 to determine a reasonable retail price: Let’s say you paid $10 for a wholesale crewneck sweatshirt to sell in your gift shop. Next, multiply that number times the wholesale price. Once you’ve determined a markup percentage, you can figure out a final price using some basic math:Ĭonvert the markup percent into a decimal and add one.
If this is the type of business you run, you can feel pretty confident using that markup percentage to determine your price. This tells you that the average markup percentage for Gift, Novelty and Souvenir Stores is 91.9 percent. 521.ĭivide 1/.521 to come up with 1.919 and then subtract one to come up with. Then, determine the gross cost by subtracting. We can now use that data to calculate a markup percentage.įirst, convert the gross margin percent (47.9 percent) into a decimal (.479). That means that, on a $100 item, the store had $47.90 left over after making a sale, which sets the wholesale price at $52.10. In the Gift, Novelty and Souvenir Stores sector, the average gross margin was 47.9 percent in 2009. Let’s make things a bit clearer by taking a look at a real-world example. This is basically an upside-down version of markup. This will show you how much money from each sale was left over after accounting for the wholesale price. To do this, locate the retail segment that’s closest to the one your business is in. The Retail Owners Institute shares performance metrics for more than 50 retail segments, and you can use them as a guideline in your own pricing strategy.Ĭheck Out Our Collection of Wholesale Crewneck Sweatshirts
If you’re trying to come up with a pricing strategy that’s more accurate for your industry, consider using industry benchmarks. You might, for example, consider calculating retail price by doubling the wholesale price and adding an additional 10 to 15 percent. There are plenty of ways to modify this pricing model to match your unique needs or even to come up with pricing that is comparable to that of your competitors. Keystone pricing is a good jumping-off point, but it isn’t always the best final price. Order Wholesale T-Shirts in Bulk and Save! When you look at it that way, charging double your cost doesn’t seem so extreme after all, does it?
And all of that needs to be taken care of before you even pay yourself.
You have to pay for employee salaries, advertising, utilities, loan payments…the list goes on and on. This gives you a markup of 100 percent, which might sound extreme, but it isn’t.Īs a retailer, you need to sell your merchandise at a price that yields a high enough profit to cover your overhead. All you have to do is take the price you paid for your product, such as wholesale t-shirts, and double it to come up with a retail price. Keystone pricing, also known as keystoning, is a simple and fairly common pricing method.
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If pricing seems to be the bane of your existence, keep reading to learn how to calculate retail price from wholesale and markup! Keystone Pricing Coming up with a solid pricing strategy is vital, though, as is understanding demand management in wholesale and retail distribution. And while it’s something that every retailer needs to do, it can be difficult to find real numbers and formulas to help you along the way. Setting retail prices and markups is, in many ways, a lost art form. When you run a retail business, setting prices is one of the most important–yet most difficult–tasks you’ll face.