How to calculate the retail price
When calculating retail price, you must first work out your markup percentage. This is the percentage you will charge over and above the cost price. This percentage will help you set the prices that will help you obtain an appropriate profit margin while remaining competitive.
There are various ways to go about deciding and calculating a markup percentage. Choosing a markup percentage can be as simple as what percentage of profit you want to earn. Keep in mind that competitively pricing your items is very important for sales. Higher prices might result in fewer sales, and too low can impact your base profit margin if you cannot cover all the expenses.
A good starting point is to perform an industry analysis to determine what percentage others in your industry are using. An average markup percentage of the industry can be calculated as follows if you have competitor prices available:
Markup Percentage = [(Selling Price – Cost Price)/Cost Price] * 100
Once you have decided on your markup percentage, you can calculate the retail price for your products.
Retail price is calculated with the following formula:
Wholesale Price x (1 + (Markup percentage / 100) = Retail Price
- You can also use our retail price calculator to save you time and avoid manual calculations.
- In this formula, the wholesale price will be the price you pay to buy the product from the supplier. Although in a service-based business, the wholesale price will be replaced with the service cost - the cost you will incur to provide the service to the customer.
Now that you have a better idea of retail pricing and calculating it, you need to implement it in your business.
A quicker and easier way to make sure you set all your prices at the right amount is to use Quickbooks online. Our efficient software helps you audit your business performance by tracking your pricing, and creating reports. This way, you can price your items accurately, which ultimately adds to your bottom line. Visit our pricing page to find the right plan for your business or sign up to a free 30-day free trial.
