How to Find the Retail Price Margin

Retail margin is one way to measure the profits of different items.

The retail margin measures the segment of the amount the consumer pays that the seller retains as profit. Consumers may want to calculate the retail margin to find out how much a store increases its prices of the cost it pays. Businesses need to know their retail price margins to figure out which items they can sell for the largest profit. The retail margin measures the profit as a percentage of the retail price, so it can be used to compare items at different price points.

Instructions

1. Subtract price paid by the seller from the retail price to find the profit per sale. For example, if a seller buys board games for $12 each and retails them for $23, subtract $12 from $23 to get $11.

2. Divide the profit per sale by retail price. In this example, divide $11 by $23 to find the retail margin rate equals 0.4783.

3. Multiply the retail margin rate by 100 to find the retail margin as a percentage. In this example, multiply 0.4783 by 100 to find the retail margin equals 47.83 percent.

References

• University of Tennessee; Selling Price, Gross Margin & Mark-Up Determination; Rob Holland; September 1998
• Building Trade.org.uk: Markup or Margin