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Retail Margin And Markup Table


This table is designed to assist in converting the different methods of arriving at a retail price. Use the multiplier on cost to achieve the desired margin. For example, to achieve a 33.33% margin use a 150% (1.50) multiplier. Another way to express the difference is that a markup percentage of 50% only yields a margin percentage of 33.33%. Markup, defined as the percentage added to cost to arrive at a selling price, is commonly used to price materials. If you want to mark up an item 20%, you add 20% of the item's cost to the cost. However, as we have demonstrated, a 50% markup does NOT yield a 50% margin! It is important that you utilize margin and markup properly. Here are the formulae that should help:

Margin
If the cost for an item is $500 and you want a 30% margin:

$500 / (100%-30%)
$500 / (70%)
$500 / .70 = $714.29

COST / (100%-GM%) = SELLING PRICE

A variation taught by many accountants is to also include what is known as base overhead factor (BOF). That ranges from 1.25% to 5%. The same margin with the BOF method, in this case 5%, would be as follows:

$500 / (100%-30%-5%)
$500 / (65%)
$500 / .65 = $769.23

COST / (100%-GM%-BOF%) = SELLING PRICE

In the Margin example above, do NOT make the common error of multiplying by .70! In this case that would yield a selling price of $850.00; nice if you can get it honestly but the greatest probability is that a competitor would undercut your bid at the same (anticipated) margin!

Markup
If an item cost $500 and you want to add a 20% markup:

500 X 20% = $10
$500 + $100 = $600 SELLING PRICE

The actual margin on this item is less than 20%.
($600 - 500) / $600 = 16.67%
(RETAIL - COST) / RETAIL

MARKUP PERCENTAGE MARGIN PERCENTAGE MULTIPLIER PERCENTAGE
20 16.67% 120
21 17.36% 121
22 18.03% 122
23 18.70% 123
24 19.35% 124
25 20.00% 125
26 20.63% 126
27 21.26% 127
28 21.88% 128
29 22.48% 129
30 23.08% 130
31 23.66% 131
32 24.24% 132
33 24.81% 133
34 25.37% 134
35 25.93% 135
36 26.47% 136
37 27.01% 137
38 27.54% 138
39 28.06% 139
40 28.57% 140
41 29.08% 141
42 29.58% 142
43 30.07% 143
44 30.56% 144
45 31.03% 145
46 31.51% 146
47 31.97% 147
48 32.43% 148
49 32.89% 149
50 33.33% 150
51 33.77% 151
52 34.21% 152
53 34.64% 153
54 35.06% 154
55 35.48% 155
56 35.90% 156
57 36.31% 157
58 36.71% 158
59 37.11% 159
60 37.50% 160
61 37.89% 161
62 38.27% 162
63 38.65% 163
64 39.02% 164
65 39.39% 165
66 39.76% 166
67 40.12% 167
68 40.48% 168
69 40.83% 169
70 41.18% 170
71 41.52% 171
72 41.86% 172
73 42.20% 173
74 42.53% 174
75 42.86% 175
Version 1.0.1


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