Whether it is chocolate, sour candies or gummies, everyone has a favorite candy. Every holiday sees an increase in candy sales, with stores putting out themed candy for Christmas, Easter, Halloween and Valentine's Day. You can find candy at nearly every store, either in aisles or at the front near the registers. Depending on the store, candy is marked up at very different rates.
In the retail industry a standard markup is called a keystone markup, which defines the percentage for marking an item for sale. The keystone markup typically represents a 100 percent markup of the item's cost or 50 percent of its sales price. Most markups in retail sales start at 100 percent or larger, except in limited situations when you buy in bulk or from grocery stores instead of making impulse buys.
If seeking a wide variety of types of candy and package sizes, head to the closest supermarket. These stores represent some of the lowest markup percentages around. With a gross profit margin of roughly 50 percent, which equates to a total of 25 percent of the sales price, this represents less than the typical keystone markup. These and many other retail stores seek to profit on impulse buying by placing candy near registers.
Bulk Food Stores
Bulk food stores that offer wholesale prices to its customers often provide the lowest markup on candy. These stores typically offer a markup of candy for nonbranded items at roughly 14 percent and branded items at 15 percent, expressed as either 1.14 or 1.15 times the original price. Even though many of these membership stores have customers who do not resale these items, customers can save by buying in bulk. Wholesalers typically resell their bulk food store purchases by marking them up even more.
Vending machines represent a different market altogether. As a general rule, vendors multiply the candy's wholesale price by 1.75 rounding to the nearest nickel, representing a markup of 75 percent over the wholesale price. This is a lower profit margin than many other vending-machine items, which motivates vendors to keep the candy options in machines as limited as possible. Other vending machine markups include multiplying the item by 2.20 and rounding to the nearest nickel.
You might be surprised to learn that movie theaters earn 40 percent of their income from their candy and concession sales. Popcorn, for example represents a 1,275 percent markup over its cost, while candy represents a markup from 300 to 400 percent. These markups inspire some theater patrons to buy candy ahead of time and sneak it into the theater, which is usually not permitted.
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