What is retail margin?

Point of Sale (POS) Glossary

The retail margin is the percentage of gross profit a store makes on an item. It is the sale price of an item minus the good’s cost, divided by the selling price, and then multiplied by 100. If an item has a sales price of $100 and the merchant paid $50 to acquire the item, the retail margin is 50%. A store must consider overhead costs, and this formula only calculates gross profit. It does not reflect any of the expenses for keeping a store open, such as rent, labor, utilities, advertising, and other costs.

A point of sale system can keep track of what a retailer paid for items and their sale prices to make it easy for a merchant to calculate retail margin. POS analytics and reporting help retailers review their profits and losses to help calculate the business’s success.