Retail Markups? What should I charge?

[starz1]

If I were to have my line retailing in high end boutiques and high end department stores, what would the store's markup be? I'm trying to take all of this in.

So if I get X piece of jewelry from my manufacturer for 1500, and I add my own markup (for my own profit) of 1500, would retail stores like Saks, Neiman, Kitson, etc. sell it for 6000? (because my wholesale cost would be 3000?), that would mean the markup is 100%, right?

 

[Diorling]

You got the percentage thing right, but Im sure the markup is more. We have to think of those things that dont sell, the things that do MUST make up for what doesn't.

 

[spottie]

The markup at better US department stores ( NM, Saks, Nordstrom, etc) is around 277% I know because I was in one of these stores last week and they had a book that had merchandise cost and retail figures ( I was looking for fall mdse. that is arriving within the next couple of months). I wasn't supposed to see it and the SAs kept trying to pull it out of my hands but I kept shifting around and saying, "I'm not done yet."

 

[starz1]

I guess I can understand the markup of 250%, I guess 100% would go to the huge rent the store has to pay, then like 50% for the employee's to be paid and 100% for the actual store to collect their income, something like that.

Is there any website or some place I could inquire about exact store markups for each store?

 

[juliet3353]

So I am working on my business plan now...woohoo what fun...and I am feeling slightly overwhelmed. How intense were your business plans?

and is markup around 2.5x wholesale? this is what I have heard and have made my business plan under this assumption...
thanks, this is a great thread and is super helpful. since many boutique people have given me the run-around )

 

[belladawn]

Business plan definately takes some time and the budget most likely will be more than you project.
As for mark-up average is 2.2x wholesale.

So I am working on my business plan now...woohoo what fun...and I am feeling slightly overwhelmed. How intense were your business plans?

and is markup around 2.5x wholesale? this is what I have heard and have made my business plan under this assumption...
thanks, this is a great thread and is super helpful. since many boutique people have given me the run-around )

 

[annabel_lee]

- Most domestic line suggested markups are 2.2 NOT 2.5. European lines could range from 2.3 - 2.5. However, if no one carries the same line as you near your area, you could mark it up as much as you want.

 

[juliet3353]

Help! So, I am working on my business plan(as stated before) and I am having trouble with the cost of goods and sales piece. As stated before, there is a 2.2x markup...in my handy little business plan pro workbook there is a table with entering direct cost of goods and cost of goods sold. So, I multiplied the cost of goods sold by .45 or 45 percent...this is what 2.2 translates at percentage wise. Breaking even with this formula is pretty impossible, am I figuring 2.2x correctly? or is it more like 20 percent. I am uber confused, and foresee no way of breaking even with this. Help. thanks again

 

[BetteT]

Help! So, I am working on my business plan(as stated before) and I am having trouble with the cost of goods and sales piece. As stated before, there is a 2.2x markup...in my handy little business plan pro workbook there is a table with entering direct cost of goods and cost of goods sold. So, I multiplied the cost of goods sold by .45 or 45 percent...this is what 2.2 translates at percentage wise. Breaking even with this formula is pretty impossible, am I figuring 2.2x correctly? or is it more like 20 percent. I am uber confused, and foresee no way of breaking even with this. Help. thanks again

Not sure what figure you are trying to get ... but from your comment, it seems like you just want to find a sales price by marking up from what the goods cost you? Or maybe that is not what you are wanting to do at all so disregard the following if that is true.

But if that is what you want ... you may have complicated it in your mind, I think. I am not an expert at this at all ... acutally know very little about it and I have not seen the workbook so I'm just taking a stab in the dark here:

Shouldn't you just take your cost of goods and multiply by 2.2 to get your sales price. Or ... if the 2.2 represents the markup above your cost ... then you'd multiply cost by 2.2 and then add that (the markup) back to your actual cost to arrive at your sales price.

Or am I way off base here?

 

[juliet3353]

Thanks BetteT.
Sorry, trying not to make this confusing .
If you are selling a piece of clothing for 300 dollars than you bought it at wholesale for 135 dollars. Then, I subtract 135 from 300 to get 165. I got this from multiplying 300 by .45. This makes it harder to turn a profit when you have rent, insurance and a paid employee (me). Am I doing this correctly?

 

[BetteT]

Ah ... I see. You already know both your cost of goods and your sales price and you want to find out what your markup is ... correct? Still not sure if that is what you are trying to figure out ... I don't know the difference between "cost of goods" and "cost of goods sold" and if you intended to compare the two.... so I may be off base.

To double check that your markup of 2.2 is correct, all you need to do is re-figure it this way: $135 times 2.2 equals $297 ... which is almost $300. So I'd say you are doing it correctly.

And from what I've seen earlier in this thread ... a 2.2 markup is a bit low, I think that 2.5 or higher is more common.

Hope that helps ... sorry if I'm still confused about what your question actually is.

 

[Lee Lee]

Designer Jewellery profit margins

Just wondering if someone can help me out. I am going to be launching a high end designer jewellery e-boutique later this year hopefully selling brands such as Tom Binns, Subversive, Fenton, Jennifer Behr, Servanne Gaxotte, Kirt Holmes etc.... You get the picture. Does anyone know what the profit margin is on designers such as these. I know clothing is around 60% + but have read that accessories are higher. Can anyone give me an idea as I need to add this to my figures any advice from buyers would be great

Thank you

 

[MSLUDLOW]

Calculating Mark-up

Markup is generally calculated as a %. To use the initial example. If you are charging $3000 for an item that will be sold for $6000 that is a 50% markup. Markup is calculated as: (retail - wholesale)/ retail

So in this case it is (6000-3000)/6000 or 50%.

If a retail is 2.2 X the wholesale the markup% is: 2.2 X 3000 = 6600
(6600-3000)/6600 = 54%

High end retailers will generally take closer to 65% or 70% markup on goods.

 

[starz1]

Stores taking way too much of a markup!

As a designer, you would think that boutiques would play fair and take their regular 2.2 markup, but oh noooooo. They want 2.7.
CRAZY!

Like were no dealing with Henri Bendel, which I'm sure is at leaste 3.0 markup

What do u guys think about retail markups? Whats the most crazyest retail markup u guys have heard of stores charging? (not brands like Chanel, but stores).

 

[starz1]

what do you a fair makeup contemporary stores should charge?

Hi there,

so I know must of the high end boutiques sell at 2.7, and Saks and those chains sells at 3.0

What do u think is fair? I personally think 50/50.
Like we have just as many costs involved as the store does, so they shouldn't be tough on designers who supply them.

Like can designers give suggested retail prices, or is this still not acceptable STILL????

 

[BetteT]

As a designer/wholesaler selling to companies lik Saks, if you "allowed" them to only markup 1.0 as terms of the sale, they probably would not purchase your line. They pretty much know how to mange their profit and loss and that includes a projected markup based on years of experience.

It's up to you to decide how much to charge them for your line .... based on your costs of doing business. If your cost is higher ... then your price to sell it must be higher. If they say you are too expensive ... then it's up to you to decide how to cut you costs and still produce a nice enough product that you are able to sell. That's just how it works. It's not a matter of what is fair. It's more about it working for the retailer and then, it only works if their customers will pay that much.

Regarding "suggested retail prices" ... suggesting is OK, but suggesting a retail price will not change the fact that the retailer will markup as they see fit. That's more of a term that discount stores use or is used when trying to sell merchandise at a discount at end of season, etc.

You may be thinking about Price Fixing ... which is colusion between retailers not to undercut the next guy when they sell the same line and may still not be legal.