The four numbers retail runs on
Cost, price, markup, margin — and two conversions between them. Markup works from cost
(price = cost × (1 + markup)); margin works from price (price = cost ÷ (1 − margin)). They are the
same dollars seen from two ends: a $10 cost ticketed at $20 is a 100% markup and a 50% margin. The classic
mistake is quoting "a 20% margin" for a 20% markup — that's actually a 16.7% margin, and rent doesn't care
which one you meant.
Keystone — doubling cost — is the traditional floor for gifts, décor and apparel. Groceries and
hardware run far lower and live on turns. Know your category before you set the percentage.
Is the stock moving?
Sell-through reads the buy: units sold ÷ units received. Seasonal goods aiming for roughly
40–60% by mid-season and 70–80%+ by season end exit without heavy markdowns. Turnover reads the
year: COGS ÷ average inventory at cost — how many times the shelf empties and refills. GMROI merges
the two: margin dollars per inventory dollar. When sell-through stalls, the Markdown module above tells
you what the discount will really cost — check it before printing the sale signs.
Go deeper per formula
The Retail Markup Calculator works the price triangle in
depth; the Discount Profit Calculator shows what a sale
must sell to pay for itself; the Profit Margin Calculator
reads the whole month; and the Break-Even Calculator
plans the full year. Counting the stock itself? The Inventory
Count Sheet prints free.
Questions owners ask
What is retail math?
The set of formulas retailers use to price and buy: cost-to-price conversions (markup and margin), markdown math, sell-through, inventory turnover, GMROI and break-even. It is arithmetic, but the ratios — not the adding — are what decide whether a shop makes money.
What is the difference between retail math and basic math?
Basic math is the arithmetic itself; retail math is the specific ratios retailers run constantly — markup vs margin, units vs dollars, stock vs sales. Two people can both do basic math and still price a $10 cost at $12 thinking it is a "20% margin" when it is a 20% markup and a 16.7% margin.
How do I calculate retail price from cost?
From a markup: price = cost × (1 + markup). From a margin: price = cost ÷ (1 − margin). A $10 item at a 100% markup and at a 50% margin both land at $20. The Retail Markup Calculator works this problem in depth.
What is a good sell-through rate?
For seasonal goods, roughly 40–60% by mid-season and 70–80%+ by season end is the usual target — enough to exit the season without heavy markdowns. Below that, the buy was too deep; far above, you likely sold out early and left sales on the table.
What is GMROI?
Gross Margin Return on Inventory Investment: gross margin dollars ÷ average inventory cost. It answers "how many dollars of margin does each inventory dollar earn per year" — many independent shops aim for roughly $2.50–$3.00 or better, but the number only means something against your own trend and category.
How deep can I discount and still profit?
A 50%-margin item survives a 20% discount only if unit volume rises about 67%. The Markdown module above shows the lift your own margin needs — check it before the sale, not during it.