How to Calculate your Product's Actual Mark-Up and Selling Price

​If you are just starting a business, you must know how to price your products to sell.​ The correct pricing of your products is essential to the success or failure of your business.

Mark-Up

The amount to be added to the investment/capital to generate income.

Selling Price
​
It is the combined investment/capital and mark-up, the price of the product to the customer.

Why is this important?

If the product is not priced correctly, it can cause losses.

How to properly calculate Mark-Up and Selling prices?
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Did you know that there is a correct formula for computing mark-up and selling price?

Calculation of Mark-Up (the amount to be added to each product)

Investment of each product/item x .20 (the percentage you apply, which is up to you) = Mark-Up

Calculation of Selling Price (the price of each product when sold to the customer)
​
Investment of each product + Mark-Up = Selling Price

For example:

I have a twenty percent (20%) mark-up in the store. Then I will price the pack of candy with fifty pieces.

One (1) pack of candy (50 pcs) = Php 70.00 (investment or price of the product)

Php 70/50 (pcs per pack) = Php 1.40 (cost per item/investment per item)
1.40 x 0.20 (the percentage you apply, which is up to you) = Php 0.28 (Mark-up)
0.28 + Php 1.40 = Php 1.68 or Php 2.00 (Selling Price)

But remember that the mark-up varies depending on the product. More often, the mark-up is higher when it comes to food. Also, don't forget how much the market price is for a specific product.​