Retail Price and MarkupRetail Price $125

Cost of Merchandise $75

Margin $50

Markup as a Percent of Retail Price 40% = $50/$125

Retail Price = cost + markup

Setting Retail PricesRetail Price and Markup

Retail price = Cost of merchandise + Markup

Markup is the difference between retail price and cost of the item.

Markup percentage = Retail price – Cost of merchandise

Retail price

Retail Price = Cost of Merchandise 1 – Markup percentage (as

a fraction)Key-stoning – a 50% markup typically used by

apparel retailers

MarkupsReductions – factors that reduce the actual

selling price from the initial sales priceInitial Markup – retail selling price initially

set for the merchandise minus the cost of merchandise

Maintained Markup – the actual sales realized for the merchandise minus its cost

Initial Markup =percentage

Maintained markup percentage + Percent reductions100% + Percent reductions

Initial and Maintained Markups

Initial Retail Price $1.00

Cost of Merchandise $.60

Maintained Markup $.30

Maintained Markup as a Percent of Retail Price 30% = $.30/$1.00

Reductions $.10