Retailers use a markup percentage to determine how much to charge for an item or service. This percentage varies based on the retailer's costs and profit needs, market demand and the competition's offer. To remain viable, retailers should regularly review their markup percentages so that their markup percentages are appropriate and profitable.
Grocery merchant wholesalers (also called distributors) have an average price markup of 15%. Regular grocery stores have a lower markup percentage, about 12%.
New York magazine reports that clothing retailer H&M uses a 50% to 70% markup on its most profitable items, which are hats, scarves, formal clothing, and jewelry. This retailer also uses some unique business practices, like leasing cheap office space to convert for its stores, to cheap overhead costs low. Other retailers tend to mark items up 100% to 125% of wholesale price.
Large markup percentages drive up the cost of eating out, especially for beverages and cheaper ingredients, like pasta. MSN reports that the average markup for a food item is about 60%, and a restaurant may mark up a nonalcoholic beverage by as much as 500%. Restaurants do, however, have very high overhead costs and keep only $0.04 of every dollar the customer spends.
Erika Rasmusson and Lisa Scherzer, writing at SmartMoney, tell readers that interior designers use a 30% to 40% markup on items they sell to customers. Despite this price hike, prices are still less than retail. Ask your designer about fees and net prices. Though some will not want to reveal these figures, other designers are very open about pricing.
Based in Colorado, Natalie Walker is a writer and child/family therapist. She holds a Bachelor of Arts in anthropology from the University of Georgia and a master's degree in social work from Colorado State University.