How do I calculate retail markup?
Goldenseal accounting software allows you to calculate markup as either a straight percentage of the buying price, or by "retail" style markup.
HINT-- When you enter markup into a Markup System, use Retail Markup if you want to apply the markup as a percentage of the selling price. Use Simple Markup if you want to base the markup on the buying price.
By tradition, retail markup is calculated as a percentage of the selling price, not the buying price.
For example, if you buy something for $1.00 and sell it for $1.50, the retail markup is 33.3% (since $.50 is one third of $1.50).
If you are calculating retail markup on top of the buying price, the formula is 1 / (1-markup %). It is impossible to have 100% retail markup, since that would price everything at infinity dollars.
HINT-- It is very hard to make change for infinity-dollar bills, because infinity minus any amount is still infinity!
Retail markup is most commonly used when you buy items, and sell them at a fixed price. If you are a construction or service business, you probably should cover your costs with separate line items in your Estimates instead. Click here for more info about markup calculations for construction and service work.
NOTE-- In Estimate line items, Percent of Total will give you a retail markup on the total project cost, while Percent of Hard uses a simple percentage of actual "hard" costs.
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