Factors Affecting the Size of Trade Markups

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Marginality is used to assess the efficiency of doing business, but the size of the trade margin does not always give a true idea of ​​the success and profitability of the company's activities.

The markup is always calculated by the ratio of two prices – purchase and retail, and it can be expressed in both monetary and percentage terms.

For example, a trading enterprise specializes lithuania telegram number database in the retail sale of bottled water. The cost price is 75 rubles, and a bottle costs consumers 150 rubles. Accordingly, the enterprise's trade markup in this case will be 75 rubles or 100% of the purchase price.


The size of the trade markup is determined by the retailer taking into account several factors:

Cost price . The selling price must cover all the company's expenses that are not covered by the purchase price itself. This includes wages, management and logistics costs, purchase of machinery and equipment, etc.
Market segment . Different niches have their own ideas about the markup that is perceived as normal. For example, when selling seasonal goods, its size can vary greatly: out-of-season fruits and vegetables can be sold with a higher markup.
Elasticity of demand . If the demand for a product is elastic, then a change in price has a strong effect on its volume, while there are also "inelastic" products, the demand for which is always almost the same. Obviously, in the first case, the seller has more opportunities to influence the consumer's decision to buy, and with the help of discounts, it is possible to significantly increase sales volume.