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.
As a savvy small or medium-sized business owner, you know that you can’t outsell the giant mega-store. You build your customer base because you provide excellent service, an enjoyable shopping experience, and a fantastic value.