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Mastering Retail Markup Calculation with Excel // A Step-by-Step Guide


In the world of retail, calculating markup is essential for setting prices, assessing profitability, and making informed business decisions.

Excel, with its robust features and versatility, provides a powerful tool for retailers to streamline markup calculations and gain valuable insights into their pricing strategies.

In this article, we'll walk through a step-by-step guide on how to calculate retail markup using Excel, empowering retailers to optimise their pricing and maximise profitability.
Understanding Retail Markup

Before diving into the calculations, it's crucial to understand what retail markup entails. Markup is the percentage added to the cost price of a product to determine its selling price. It represents the difference between the cost of goods sold (COGS) and the selling price, expressed as a percentage of the cost price. Retailers use markup to cover expenses, generate profits, and ensure sustainable business operations.
Step 1: Gather Necessary Data

The first step in calculating retail markup using Excel is to gather the necessary data. This includes the cost price of the product (COGS), the desired markup percentage, and any additional expenses such as overhead costs or taxes. Ensure that the data is accurate and up-to-date to obtain reliable results.
Step 2: Input Data into Excel

Once you've gathered the required data, open Excel and create a new spreadsheet. Enter the cost price of the product in one cell, the desired markup percentage in another cell, and any additional expenses in separate cells if applicable. Organising the data in a clear and structured manner will facilitate the calculation process.
Step 3: Calculate Selling Price

In Excel, use a simple formula to calculate the selling price based on the cost price and markup percentage. In a new cell, enter the following formula:

=Selling Price = Cost Price * (1 + Markup Percentage)

Replace "Cost Price" with the cell containing the cost price of the product, and "Markup Percentage" with the cell containing the desired markup percentage. This formula will automatically calculate the selling price based on the cost price and markup percentage inputted.
Step 4: Verify and Adjust

Once you've calculated the selling price, verify the accuracy of the result and make any necessary adjustments. Consider factors such as market demand, competitor pricing, and customer perceptions when setting prices. If the calculated selling price seems too high or too low, revisit the markup percentage or reassess your pricing strategy accordingly.
Step 5: Consider Additional Expenses

In some cases, retailers may need to factor in additional expenses such as overhead costs, taxes, or shipping fees when calculating markup. To incorporate these expenses into the calculation, simply add them to the cost price before applying the markup percentage. Adjust the formula accordingly to ensure accurate results that reflect the true cost of doing business.
Step 6: Evaluate Profitability

Once you've calculated the selling price, evaluate the profitability of the product by comparing it to the cost price and considering any additional expenses incurred. Analyse the margin between the selling price and the cost price to determine the profit margin and assess the viability of selling the product at the calculated price.
Step 7: Customise and Automate

Excel offers a wide range of customisation options and advanced features to streamline markup calculations and improve efficiency. Explore functions such as conditional formatting, data validation, and pivot tables to customise your spreadsheet and automate repetitive tasks. By leveraging Excel's capabilities, you can create dynamic and interactive tools that enhance decision-making and drive business growth.

Excel is a versatile tool for retailers, enabling them to calculate markup, optimise pricing, and make informed decisions.

By leveraging Excel's capabilities, retailers can streamline calculations, assess profitability, and stay competitive.

With accurate pricing and a solid grasp of markup principles, retailers can maximise profitability and achieve long-term success in the dynamic retail landscape.
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