Retail Pricing Calculator | Price Items with Tax

Markup and margin are related but distinct concepts in retail pricing: Markup is calculated based on cost (Markup = (Selling Price - Cost) ÷ Cost × 100%), while margin is calculated based on selling price (Margin = (Selling Price - Cost) ÷ Selling Price × 100%). For example, if an item costs $10 and sells for $15, the markup is 50% ($5 ÷ $10 × 100%), but the margin is only 33.3% ($5 ÷ $15 × 100%). A common confusion occurs when retailers target a 50% "profit" without specifying whether they mean markup or margin. To convert: Margin = Markup ÷ (100% + Markup) and Markup = Margin ÷ (100% - Margin). Understanding this distinction is crucial for accurate pricing and financial planning.

Whether to display tax-inclusive or tax-exclusive prices depends on several factors: 1) Local regulations - Some jurisdictions require tax-inclusive pricing, while others mandate separate display of tax. 2) Target market - B2C customers often prefer seeing the final price including tax, while B2B customers typically expect prices without tax since they may be tax-exempt. 3) Competition - Consider what pricing display method your competitors use. 4) Psychology - Tax-inclusive prices are higher but prevent checkout surprise, while tax-exclusive prices appear lower initially but may lead to cart abandonment when tax is added. 5) E-commerce platform - Ensure your system can handle your chosen display method. Many retailers in the U.S. use tax-exclusive pricing, while in countries with VAT, tax-inclusive pricing is more common.

For comprehensive retail pricing, calculate your true cost of goods sold (COGS) by including all costs associated with bringing products to market: 1) Product cost - The wholesale or manufacturing cost. 2) Shipping and freight - The cost to receive inventory. 3) Customs and duties - For imported products. 4) Payment processing fees - Credit card fees typically range from 1.5-3.5%. 5) Packaging materials - Boxes, bags, tissue paper, etc. 6) Promotional discounts - Account for planned sales or loyalty discounts. 7) Returns and damage allowance - Typically 1-5% depending on the product category. Add these to determine your actual COGS, then apply your markup formula. For example, if a $20 wholesale item incurs $5 in additional costs, your actual COGS is $25, not $20. Using a 100% markup, your selling price would be $50, not $40, maintaining your profit margin despite the additional costs.