What is retail markup?

Point of Sale (POS) Glossary

Retail markup is the difference between an item’s wholesale cost to the merchant and its selling price. A retail markup may be quantified by a percentage amount. For example, if a merchant buys something for $5 and then sells it for $10, the profit is $5, which is a 100% markup.

The amount of retail markup is an important consideration when choosing inventory. However, sometimes the percentage amount may mean less to a merchant’s decision-making process. For instance, a very low dollar item may have a high percentage markup, such as candy purchased for a quarter that could sell for $1.00 but is subject to theft, breakage, or expiration.

A robust point of sale system can track the acquisition cost of items, sale prices, time in inventory, and more. A business could then use POS analytics to help determine what markup best fits an item.