Retailing And Merchandising In Textiles And Appare

Retailing and Merchandising in Textiles and Appare 3(2+1)

Lesson 17 : Merchandising (contd…)

Retail pricing

Retail selling prices are based on predetermined store pricing policies and wholesale costs.

Markup :
Markup is the difference between the wholesale cost and the retail price of merchandise. It can be figured as a percentage of retail value or calculated on the basis of cost. Most retailers calculate markup as a percentage of retail price. This method is used because expenses and profits are commonly expressed as a percentage of net sales based on retail prices. The markup must cover markdowns, shortages, and operating expenses and still create a profit. Operating expenses include salaries, travel expenses, sales promotion, and overhead, including rent, utilities, and store maintenance.

Retail price – cost = Markup Retail pric
Retail price

Price Points: Several price points are offered in each department or merchandise category. The term price range refers to the span between the lowest and highest price points. Merchandise of comparable quality usually falls into the same.

Retail Pricing
Pricing of a Typical Moderately Priced Dress
Retailer's Costs

Wholesale cost
($61.52 less 8 percent discount for prompt payment) $56.60

Allowance for markdowns 5.00
(averaged over all dresses in stock) 3.00

Allowances for shortages and pilferage Salaries and
benefits (averaged per garment)
Sales staff 7.00

Merchandising and buying staff (including expenses) 8.00

Clerical and stock room staff
(receiving, marketing, deliveries, and ' other expenses) 5.00

Advertising, display, and sales-promotional staff
Administrative staff
(executives, credit and accounting officers,
including expenses) 11.00

Employee fringe benefits 2.00
Overhead
(rent, insurance, utilities, cleaning, and security)

TOTAL 100
$115.60
Profits before taxes 8.40
SELLING PRICE $124.60 Retail price
54 %Markup -56.60 Cost
$67.40 Markup
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*These are approximate figures; percentages vary depending on the kind of store, Markup percentages vary according to volume and store.