imagine having a store that's busy all
day long people are pouring in
merchandise is flying off the shelf what
could possibly go wrong well you could
go broke how can this happen by not
figuring your margins correctly we're
calculating your gross profit
percentages on this episode of retail
tips your gross profit percentage is
more than a simple markup a markup is
just the difference between the
wholesale cost and the retail price for
instance if you buy a candy for a dollar
and sell it for a dollar fifty your
markup is 50 cents or 50 percent that
sounds good right but gross profit takes
into account the bigger business picture
it's the percentage of every dollar you
earn that can be used to cover your
expenses so that same dollar 50 candy is
only giving you a gross profit of 33%
and that's really not enough every
merchandise category in your store has a
gross profit benchmark and the benchmark
for candy can go as high as 45% prepared
foods can bring up to 52% fountain
drinks up to 65% so here's how to
calculate the gross profit percentage
for a specific item we take the cost of
the item and divide it by the number you
get by subtracting the gross profit
percentage you want from 100 let's say
we're pricing our packaged meat
categories which should give us up to a
40% gross profit 100 minus 40 is 60 now
make sure to put a decimal point before
the 60 now let's say the cost of one
sausage is 65 cents point six five when
we divide it by point six zero we get a
retail price that gives us a forty
percent gross profit in this case the
right retail price for this item is a
dollar eight and that's all there is to
it four different categories just plug
in different gross profit percentages
like 20% for dairy
funny guys I said daring not Terry if
you have any other questions about your
gross profits contact a CBC Learning
Center specialists we're here to help
for a complete list of gross profit
benchmarks to apply throughout your
store see our convenience store owner
operator reference guide it's in the
store at C square it also includes
dozens of helpful tips and customizable
forms including a handy spreadsheet that
does your gross profit calculations for
you and that could save you some time
and if there's a subject you'd like to
see on retail tips talk to us at C
square thanks for watching