# How to Calculate Price

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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.