How to Calculate Price

When you are in the retail business, you need to calculate the right price to sell an item. Sell the item too cheaply and you make a loss. Put too high a price on the item and your customers might not purchase it. Calculating an item's price for sale, or calculating an item's price markup, can be achieved with a little industry research and a fair knowledge of basic math.

Research the industry norm for percentage markups. For example, if you're an upscale clothing store, you might have a 50 percent markup.

Convert the markup to a decimal by dividing by one hundred. In the above example, 50 / 100 = .5.

 

Subtract the decimal in Step 2 from 1. In the above example, 1 - .5 = .5.

 

Divide result in Step 3 by the cost of the item. For example, if your cost was $12, then $12 / .5 = $24. This is the price at which you would sell the item.

 

Tips

  • Ensure that you include all of your overheads and expenses when pricing items. Just because the market markup price may be competitive, it may not be a profitable price if it doesn't cover your expenses.

References

About the Author

Stephanie Ellen teaches mathematics and statistics at the university and college level. She coauthored a statistics textbook published by Houghton-Mifflin. She has been writing professionally since 2008. Ellen holds a Bachelor of Science in health science from State University New York, a master's degree in math education from Jacksonville University and a Master of Arts in creative writing from National University.