Forums: Discussions for entrepreneurs and small business.

I sell flooring and 30% of each carton I sell is my profit. Is this appropriate? For those of you in retail, would you mind sharing your margins? Thanks!

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Markups vary greatly, from the "I`ll make a reasonable profit" to "I`m just plain gouging my customers."  I worked for a parts supplier once for example that sold heavy equipment parts.  Their markup was 200%.  this markup rate was set 35 years earlier when they first opened for business. At that time, they had no competition.  Since then, 40 other companies opened in the region that sold the same type of products and services.  Their markups were in the 40% to 50% range.  Needles to say, our company could not compete. 

Lesson here is that markup is affected not only profit margins that need to be met, but by competition.



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I much prefer to set prices according to the market rather than the cost. Once you establish the market price for your product/service - your cost can be used to determine if the business can make a profit.

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I think it depends a lot on the product and what the seller feels the market can bear. For instance, we all know the huge markup that is on a pizza, you hear it all the time, but, obviously everyone can`t achieve those same kinds of markup, so, a lot is based on the product and market for it.

I think you should be making sure you have at least 60-100% mark up. If not, you have got no margin for marketing promotions and discounts. Last but not least, you need to factor in wastages and damages/discrepanices to some stock.

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