ShopMazHow to set prices and margins in a small shop
Price is the fastest way to change your profit, and the easiest one to get wrong. A little arithmetic keeps you safe.
Markup and margin are not the same
Markup is profit divided by cost. Margin is profit divided by the selling price. Buy at 80 and sell at 100: profit is 20, markup is 25% and margin is 20%. Always check which one you mean.
Choose a target margin by category
Staples such as sugar and flour sell in volume on thin margins. Convenience items, accessories and impulse buys can carry much higher margins. Set a target for each category instead of one number for the whole shop.
Retail and wholesale prices
If you also sell in bulk, set a wholesale price that is lower per unit but still above cost plus your expenses. Make the quantity that earns the wholesale price clear to the customer.
Move prices when costs move
When a supplier raises a price, update your selling price the same day. Waiting for old stock to run out is how a margin quietly disappears.
Never sell below cost by accident
Before giving a discount, check the purchase price. A 10% discount on a 12% margin item leaves almost nothing. Review the items you sold with a very low profit each week.
Check the market, then decide
Look at nearby shops for your top twenty items. You do not need to match every price. Be competitive on the items customers compare, and earn your margin on the rest.
- Store the purchase price, retail price and wholesale price on each product.
- Items with a changing price, such as vegetables, can use a price range, and the sale screen asks for the price at the counter.
- Review profit by item and category in Reports.
Common questions
How do I find my margin quickly?
Subtract the cost from the selling price, divide by the selling price and multiply by 100. For 80 cost and 100 price, (100 − 80) ÷ 100 = 20%.