I see a lot of articles that highlight the industries/products with the highest markeups (e.g., glass frames, cosmetics, watches, etc.), but I’m not just looking for the highest, I’m interested in a more comprehensive list. Doesn’t seem to be transparent at all! Thanks for your help.
This is a Quora question I was asked and here is my answer.
I can only talk from the perspective of the industries I know and have worked in.
Markup (more correctly referred to as retail or reseller margin) is less about the product and more about the channel in which it sells.
Here is a general list:
- Club: 14%;
- Amazon: 15-20%
- Mass (general merchandise, home improvement, outdoor/sporting goods, electronics): 25–30%;
- Grocery: 35%;
- Drug: 42%;
- Specialty (various categories): 50% (also called keystone markup)-65%.
The correct way to compute margin is that you have to work forward, not backwards, for pricing and margins.
For example: if wholesale cost is $50, and the channel operates on a 50 margin, then they markup to $100, so the margin of 50 is difference between the wholesale and retail (manufacturers suggested retail price, or MSRP or SRP).
Use this equation: take 1-(wholesale divided by SRP) to arrive at the correct margin.
I post what I see and do in consumer products. But I am just one person with my own perspective. I want your opinion and observations from your point of view. Please comment below so I and others can learn. Thank you!