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| Retail Supplies |
Basic Retail Math |
Retail and Wholesale Supplies
| Name |
Location |
Phone |
Products Offered |
| Fasteners
for Retail |
Cleveland, OH |
800.422.2547 |
Pegboard repair tabs,
clip
strips, vinyl
pockets, magnetic strips |
| Insignia
Systems |
Plymouth, MN |
800.874.4648 |
Sign making machines,
PC sign
making software
and custom card stock. |
| Merchandising Inventives | Waukegan, IL |
800.367.5653 |
Signage system,
components
for a point of
purchase project, stock corrugation, literature holders, design &
fulfillment
services |
| Outwater
Plastics |
Woodridge, NJ |
888.688.9283 |
Architectural columns,
moldings, display ticket
molding, hard-to-find connectors. |
| Rose
Displays |
Salem, MA |
800.631.9707 |
Sign frames and base
attachments, banner clamps
for ceiling promotions. |
| Trion
Industries |
Wilkes-Barre, PA |
800.444.4665 |
Sign frames and base
attachments, slat wall and
pegboard accessories. |
Basic Retail Math
Cost: The amount a retailer pays for a product that they intend to resell. This is the wholesale price.Price: Selling price the retailer receives when they sell a product. This is the retail price.
Profit: The difference between cost and selling price.
Margin Formula: (Profit/Selling Price) X 100 = Margin. Margin is the profit expressed as a percentage of the selling price.
| (Profit/Selling
Price) X
100 = Margin |
| $2.00 (Selling Price) -
$1.00
(Cost) = $1.00 (Profit) |
| $1.00 (Profit) / $2.00
(Selling Price) X 100 = 50% Margin |
| Multiplying the answer
by 100
changes the figure to a percentage. |
Mark Up Formula: (Profit/Cost) X 100 = Mark Up. Mark up is the profit expressed as a percentage of the cost.
| (Profit/Cost) X 100
=
Profit |
| $2.00 (Selling Price) - $1.00 (Cost) = $1.00 (Profit) |
| $1.00 (Profit) / $1.00 (Cost) X 100 = 100% Mark Up |
When compared side by side, identical items that cost and are sold for the same amount, a mark up will show a larger number. This is because mark up factors in cost and margin factors in selling price.
Earns versus Turns: The amount a retailer makes on the number of units sold.
Space to Sales: The amount of shelf space an item receives is related to the item's total share of sales. If a product produces 10% of a retail sales, that item should have 10% of the retail space in the store.
More on Mark Up and Margin
Markup versus margin versus return, the basics of retail math can be confusing. Here's a quick study to help you understand the five principles of retailing arithmetic.
Markup versus Margin
If you mark something up 100% or have a yield of 50% margin the percentage is the same, with two different ways of looking at it. Markup works from cost by stating how much, by percentage, an item sells for above its cost. Markup is always the higher figure because it has a smaller base. Margin works down from the selling price, stating what percent of the pie is left after cost is subtracted.
Basic Formulas
Markup = Profit / Cost. To compute markup, divide the profit by the cost. You buy a box of dog treats from your distributor for $5 and sell it for $9. To figure the markup, divide the profit of $4 ($9 retail price minus $5 cost) by the $5 cost. That gives you an 80% markup.
Margin = Profit / Retail Price To figure margin, divide the profit by the retail price. From the above example, the $4 profit divided by the $9 price equals a margin of 44%.
To help you visualize the Markup versus margin, here's a cheat sheet:
|
Comparing Markup
and
Margin
|
|
|
Markup
|
Margin
|
|
33%
|
25%
|
|
43%
|
30%
|
|
50%
|
33%
|
|
60%
|
37%
|
|
67%
|
40%
|
|
100%
|
50%
|
|
150%
|
60%
|
|
300%
|
75%
|
Discounting Rule
Sale Price = Margin minus percent of discount. For example 60% margin - 15% discount = 45% margin.
Turnover
Turnover = Cost of Goods Sold / Average Inventory in a Year. For example your Cost of Goods Sold is $9000. Your starting inventory is $3300 and your ending inventory is $2900. That makes your turnover 2.9%. $9000 COGS / $3100 average inventory.
Retail Price Calculator Link. This will take you to another site.