Convert a retail markup into the margin it produces, allowing for discount and tax.
Markup is applied to cost while margin is measured against price, so the two are never equal: a 120% markup is a 54.5% margin. Any discount comes off the selling price and therefore reduces margin faster than it reduces price. Pricing from a target margin rather than a markup is what stops a retail range being sold at a loss once discounts are applied.
Retail Markup
Retail Price = cost × (1 + markup %); margin % = profit ÷ selling price
Retail Price = cost × (1 + markup %); margin % = profit ÷ selling price Markup is applied to cost while margin is measured against price, so the two are never equal: a 120% markup is a 54.5% margin. Any discount comes off the selling price and therefore reduces margin faster than it reduces price.
Pricing from a target margin rather than a markup is what stops a retail range being sold at a loss once discounts are applied.
This calculator takes 4 inputs: Cost price, Markup on cost, Expected discount off list, Tax added at sale. The pre-filled defaults are a realistic starting point — replace them with figures from your own environment for a result you can act on.