What is the retail price?
The retail price is what the final customer pays in the shop or at checkout. It has to cover the cost of the product, your share of running the business and a profit, and in many countries it is shown with sales tax or VAT already included.
Formulas
Price before tax = cost × (1 + markup ÷ 100)Retail price = price before tax × (1 + tax ÷ 100)
Worked example
You buy a product for 25.00 and use a 60% markup, so it sells for 40.00 before tax. With 10% tax the customer pays 44.00. Your profit is 15.00 per unit, a 37.5% margin on the pre-tax price.
How to use the retail price calculator
- Enter your figures: cost per unit and markup. Sales tax / VAT is optional and counts as zero when left empty.
- Read the result. It updates as you type, so there is no button to press.
- Try other numbers to compare scenarios. Reset brings back the example values.
Getting it right
- Tax is collected for the government, so profit and margin are worked out on the price before tax.
- Doubling the cost (a 100% markup) is known as keystone pricing and gives a 50% margin.
- Compare the result with what similar products sell for. A price that covers your costs but sits far above the market will not move.
Frequently asked questions
What is keystone pricing?
Keystone pricing sets the retail price at twice the wholesale cost. It is a quick rule of thumb in clothing, gifts and homeware, and it equals a 100% markup or a 50% gross margin.
Should the retail price include tax?
That depends on local practice. Prices in the UK, EU, India and Bangladesh are normally shown tax-inclusive, while shops in the United States usually add sales tax at the till. Leave the tax field at 0 if you quote prices without it.
How is retail price different from wholesale price?
The wholesale price is what a retailer pays the maker or distributor. The retail price is what the retailer then charges the public, and the gap between the two is the retailer’s gross profit.