How Much Mark Up On products?

**jpomerenke** · 10-26-2004 03:18 PM

Im curious what everyone thinks is a good markup on products in online retail stores. I know that each industry can be different, but asically i am just posting this to get a thread started about the subject. It has never been discussed really before.

Thanks

**insomnia** · 10-26-2004 05:29 PM

Probably no real number or percentage, but I'd guess a 20%-25% markup usually exists.

**jpomerenke** · 10-26-2004 05:36 PM

I would say that is in the way low end. I would say 50-75% is average and some of the big retailers are above 100% easily.

Also.... niche markups with less competition are usually higher too.

The truth is if you have a business financial background, you should know this, but anything under 50% markup even with low overhead is hard to conduct business. Unless shipping is a a revenue generator.

All you have to do is look at publicly traded companies financials and you know approx what there markup is on there products.

**blueeyebrit** · 10-26-2004 07:08 PM

The larger the company the larger the mark up usually, as they get the bigger discount. I know that some of the largest electronic retailers in Australia only pay 30-32% of the RPP for the product before charing the full RRP on it.

**jpomerenke** · 10-26-2004 07:18 PM

Originally posted by blueeyebrit
The larger the company the larger the mark up usually, as they get the bigger discount. I know that some of the largest electronic retailers in Australia only pay 30-32% of the RPP for the product before charing the full RRP on it.

It also matters what market. For example the grocery business is small markup and like you said the electronics business is also not very high.

**mpnetwork** · 10-26-2004 09:14 PM

That a toughie because so many factors should go into your pricing. But just looking at "is it fair/good"...

a) I guess look at your operating costs, then what do you need to achieve a desired profit.

b) If you have brick-and-mortar competition, is your pricing (including shipping) comparable?

c) If you have online competition, is your pricing comparable?

If you can achieve a profit and meet b) and c), I would say your mark-up is fair.

If, in order to achieve a profit, you cannot meet b) and/or c), then you will need to differentiate yourself in a way that justifies your higher prices.

As for a specific percentage, online store (without breaking into specific niches) would be too general.

**jpomerenke** · 10-26-2004 10:12 PM

Originally posted by mpnetwork
That a toughie because so many factors should go into your pricing. But just looking at "is it fair/good"...

a) I guess look at your operating costs, then what do you need to achieve a desired profit.

b) If you have brick-and-mortar competition, is your pricing (including shipping) comparable?

c) If you have online competition, is your pricing comparable?

If you can achieve a profit and meet b) and c), I would say your mark-up is fair.

If, in order to achieve a profit, you cannot meet b) and/or c), then you will need to differentiate yourself in a way that justifies your higher prices.

As for a specific percentage, online store (without breaking into specific niches) would be too general.

Good post.... as i mentioned earlier, i wasnt "asking" i was just starting a thread for some discussion....

I personally just live by a couple rules when it comes to looking at suppliers price lists, etc.... can i have at least a 75% markup but still be very competitive or even better ...in the lower tier of pricing online.

Ive noticed that the "niche" stores have better margins and not nearly as much "price" competition.

I guess i have a thing for getting as many random thoughts for businesses in my head and then getting price lists from the better suppliers. Most prices are to high to be competiitve online but i have found a few that are in my "future" business ideas folder in my head

Joey

**dino.707** · 12-16-2011 07:01 PM

The markup varies to each industry. For example, in the restaraunt business you take the cost of the dish and multiply by four to get your normal menu price. In department stores it's normal to take the wholesale cost and multiply by 41/2. I've seen the paperwork to prove it. In other businesses, like the grocery business, the mark up may only be 3%, on produce especially, and take a loss in another department just to bring people into the store. But what it really boils down to, is that one has to ask themselves, what would I pay for this item? and start from there. There are different suppliers that give different wholesale prices but the same retail price point. In short do your homework, check out the competition, and see if you can get a better price supplied to you. We are after all, on a world market now. There may be someone in New Zealand looking for a location here in the States. Go for it!

**Adam_B** · 01-04-2012 09:43 AM

I believe I am accurate in saying...that generally retail MARK UP is actually around 100% percent....the MARGIN is usually around 50%....meaning a item which is bought by the retailer for a wholesale of $10 will be sold retail for $20. Neither one of these is to be confused with Profit or Net (the amount you ACTUALLY make after paying all overhead cost)