What is product markup
Markup — is the amount or percentage that a store adds to the price calculation base to obtain the selling price. The base may be the supplier price from the invoice, but it is more correct to calculate it from the full cost of the product, including delivery and other expenses. Markup must cover rent, salaries, taxes, discounts and provide the planned profit.
In inventory accounting, two indicators are distinguished. Set markup — is the percentage you set when goods are received or which the program inserts from the category settings. Actual markup — is the real earnings percentage calculated from the current retail price and purchase price or cost price. If the current retail price or product cost changes, the actual markup deviates from the set one, and it is this indicator that must be controlled. The impact of discounts in specific sales is shown separately — in sales reports.
What is happening with prices in 2026
According to the State Statistics Service, in January–June 2026 consumer prices in Ukraine increased by 5.7%, and in annual terms inflation at the end of June was 7.2%. In the NBU’s June survey, trade enterprises improved their assessments of turnover and purchases, while all sectors expected a further slowdown in the growth rates of purchase prices and prices for their own goods.
For a store, this means constant movement of purchase prices in different directions: some items become more expensive, others become cheaper. The selling price needs to be reviewed after every significant change in purchase price, exchange rate or supply costs. Rare manual revaluation creates two risks: some goods are sold with insufficient profit, while others lose competitiveness because of an overpriced price.
Free prices apply to most goods in Ukraine, but there are exceptions. Resolution of the Cabinet of Ministers of Ukraine No. 650, for the period of martial law and three months after its termination, limits the trade markup to 10% for certain domestically produced food products: premium wheat flour, pasteurized milk with 2.5% fat content in film packaging, rye-wheat bread, loaf bread, category C1 chicken eggs, chicken carcasses and quarters, refined sunflower oil. Organic products are not covered by this rule. Separate rules also apply to alcoholic beverages, for which minimum prices are established, and to medicines. Before changing the price of regulated goods, check the current version of the relevant act.
How to calculate markup, margin and selling price
Markup is calculated from cost price or another accepted base, while margin — is calculated from the selling price. Because of different denominators, these indicators cannot replace each other: with the same difference in hryvnias, the markup percentage is always higher than the margin percentage.
| Indicator | Formula | Example: base UAH 400, sale UAH 600 |
|---|---|---|
| Markup in hryvnias | Selling price − base | UAH 200 |
| Markup as a percentage | (Selling price − base) ÷ base × 100% | 50% |
| Margin | (Selling price − base) ÷ selling price × 100% | 33.3% |
| Price with known markup | Base × (1 + markup ÷ 100) | 400 × 1.5 = UAH 600 |
| Base with known price and markup | Selling price ÷ (1 + markup ÷ 100) | 600 ÷ 1.5 = UAH 400 |
The difference between the selling price and cost price must cover rent, payroll, taxes, acquiring, marketing, write-offs and other period expenses. For a management decision, evaluate markup, product profit, turnover and earnings per unit at the same time. A moderate markup on a fast-moving product often brings more money than a high percentage on a product that lies on the shelf for months.
Problem 1. Markup is calculated from an incomplete product cost
The supplier price from the invoice — is only part of the product costs. Delivery, insurance, customs payments, packaging and label printing reduce actual earnings. If a store adds 30% only to the invoice price, the real markup after accounting for related expenses will be noticeably lower.
Therefore, the first step is to define a single calculation base. Torgsoft has the concept of accounting price for this: supplier price plus additional cost price and additional purchase value. Expenses that must be included in the product cost should be allocated before setting the retail price.
In the incoming invoice, on the «Invoice expenses» tab, you can add financial expenses: transport, bank services, price tag cost and others. In the product card, markup is set as a percentage or amount in the fields «Markup (%)» and «Markup (UAH)» — Torgsoft recommends using one type of markup. After entering the value, click the calculation button next to the «Retail price» field, and the program will determine the retail price. Reverse calculation works automatically: enter the desired «Retail price», and the «Markup (%)» field will be filled in by itself. The «Product accounting price analysis» report shows what the cost of each item consists of: purchase price, additional cost price, financial expenses.
Problem 2. One percentage is applied to the entire assortment
Products perform different roles. Items known to customers shape the perception of the store’s prices, so overpricing them is risky. Complementary products and accessories generate the main margin. Cheap goods can withstand a high percentage, while on expensive goods a large percentage scares the buyer away with the final price. A classic example from retail practice — baby diapers with a 3–5% markup that bring the customer into the store, while related baby products are sold with a much higher margin.
A practical pricing rule consists of at least three levels:
- target retail and wholesale markup for each product type;
- markup ranges depending on the purchase price: a higher percentage for cheap items, a lower one for expensive items;
- exceptions for individual models, suppliers and goods with regulated prices.
In the «Product type» directory, the fields «Markup (%)» and «Wholesale markup (%)» are set — a new product in this category receives them automatically when it is received. The «Markup from product price» switch enables the «Markup group» directory: you create ranges «Price from — Price to» and specify retail and wholesale markup for each as a percentage or amount. In the product card, it is enough to click «Calculate markup by purchase price», and the program will insert the percentage from the required range. When importing an invoice from Excel, this rule takes into account the markup formation method «Product – Product type – Import markup».
Problem 3. Revaluation lags behind purchase prices and the exchange rate
Editing each card manually takes a long time, so revaluation is often postponed, and identical goods are sold under different conditions. It is advisable to define in advance the events after which prices are reviewed: a new receipt at another price, an exchange rate change above the set threshold, a change in supply costs, a seasonal transition or a decision to sell off remaining stock.
The mode «Warehouse – Calculation of retail and wholesale prices by markup and exchange rate» shows the current and calculated price and price change for filtered goods. Here you can change the retail markup for a group of goods or calculate markup by the current price and the latest purchase, and then set new retail prices in bulk — immediately or through a revaluation act that preserves the history of changes. Label printing is available at any stage. For targeted changes in «Warehouse status», there is an action «Product sale conditions – Change selling price» with an increase, decrease or price setting in percentages or hryvnias. If the goods were received without purchase prices, the «Purchase price calculation» mode will restore them as a percentage of the retail price or find them in other invoices.
Problem 4. Discounts lower the price below the acceptable level
A discount card discount, promotion and manual price adjustment may combine in such a way that the product is sold below cost. The risk is especially high for items with a low markup and after new batches become more expensive. Define the minimum acceptable price and set which employees have the right to confirm a sale below the threshold.
In the menu «Settings – Parameters», on the «Product» tab, the «Minimum product markup (%)» is set. For each user, «Minimum sale price control» is configured separately: allow sale below cost, sell at cost or accounting price with minimum markup, or request confirmation before sale. Additionally, in the product type you can set the «Maximum discount (%)» so that the customer’s discount card does not override the category markup.
Problem 5. The seller calculates the wholesale price manually
When the same product is sold both by the piece and in batches, the seller keeps the terms in memory or in a separate file. On large orders, they calculate manually, forget the wholesale discount or, conversely, sell the batch cheaper than the terms allow. It is better to define price levels by quantity in advance and check the profitability of each level.
The additional option «Wholesale price policy» automatically switches the price in the receipt according to the quantity thresholds you set, for example from 5 units — small wholesale, from 20 — large wholesale. The wholesale price is formed as a discount from the retail price or as a markup from the accounting price; the method is selected for each product group. Wholesale prices are unified for the entire retail network, and with configured synchronization they are also transferred to the online store, so the cashier and the website work according to one approved rule.
Problem 6. Set markup is not compared with actual markup
Purchase prices change, some goods are sold with discounts, and remaining stock has different cost prices. Because of this, the percentage set during receipt eventually stops showing real earnings. Control should be carried out in at least three dimensions: actual product markup, product profit for the period and stock turnover.
In «Warehouse status», the columns «Set markup» and «Actual markup» are displayed side by side — the actual one is calculated from the current retail price and the latest purchase price or cost price. If the cost price is calculated by the latest purchase price, after updating the exchange rate and recalculating the cost price, the indicator will also reflect exchange rate fluctuations. The «Product profit by days for the period» report shows earnings taking into account sales, returns and cost price, while «Analysis of the impact of selling price on profit» shows how discounts and price changes affected the result. For assessing a specific batch, there is «Incoming invoice profitability analysis».
Examples from Ukrainian retail
ATB private-label price levels
The ATB chain develops four private labels that cover different price segments: the budget «Rozumnyi Vybir», the mid-range «Den u Den», the «middle plus» «Svoia Liniia» and the premium De Luxe Foods & Goods Selected. For a small store, the principle itself is scalable: divide the assortment by price role and set a separate markup rule for each group instead of one percentage for everything.
Personal offers by «Silpo»
In the «Vlasnyi Rakhunok» program, the «Silpo» chain creates personal offers based on purchase history, and the participant activates those they plan to use. This approach concentrates the benefit on selected items and preserves the planned price for the rest of the assortment. In a small store, the principle is reproduced through a limited list of promotional goods and a preliminary check of the minimum price for each item.
Where to start
- Define the base. Check which expenses are included in the cost price and accounting price, and allocate invoice expenses before setting retail prices.
- Create rules. Set markup by product types and purchase price ranges, record exceptions and the minimum acceptable price.
- Start control. After each significant change in purchases or exchange rate, review actual markup, product profit and remaining stock.
Complete markup management checklist
- Fix the cost price formula and the list of expenses included in the base.
- Divide the assortment by product types and price roles.
- Set target retail and wholesale markup for categories.
- Set markup ranges for cheap and expensive goods through a markup group.
- Identify goods with state price regulation.
- Define minimum product markup and rights to sell below the threshold.
- Describe the events after which revaluation is launched.
- Check the calculated price before mass application.
- Print new labels immediately after price changes.
- Control actual markup for key goods weekly.
- Analyze product profit and slow-moving stock monthly.
- Review rules after a change in assortment, supplier or purchase terms.
Frequently asked questions
There is no universal percentage. Calculate the full base including expenses, check the competitive range, sales speed, acceptable discount and required profit amount. Different categories need different rules: cheap and exclusive goods can withstand a high percentage, expensive goods and traffic-driving products — cannot.
Markup divides the difference between the selling price and the base by the base, while margin — by the selling price. If a product is bought for UAH 100 and sold for UAH 150, the markup is 50%, and the margin — 33.3%.
Yes. In «Product type», retail and wholesale markup are set and automatically inserted for a new product when it is received. For more complex logic, there is «Markup group» — different percentages depending on the product purchase price.
Set the minimum product markup in the program parameters and the minimum price control scenario for each user. Torgsoft will sell the product at the minimum acceptable price or request confirmation depending on the selected rule. For individual categories, the maximum discount in the product type additionally applies.
The current cost and licensing terms are listed on the page of the «Wholesale price policy» option. Basic tools for working with markup, revaluation and minimum price control are available in the standard Torgsoft package.
Markup management begins with the correct base and ends with checking the actual result. Torgsoft stores pricing rules together with inventory accounting: it inserts category markups during receipt and, with the corresponding method, during import, recalculates prices in bulk by exchange rate, controls sales below the set threshold according to the selected scenario and shows real earnings in reports.
Check markup management on your own goods
Download the Torgsoft demo version and configure test rules for categories, receipt and revaluation.
Download demo versionSources
- State Statistics Service: price indices in June 2026, express release.
- Interfax-Ukraine based on NBU data: business activity expectations of enterprises in June 2026.
- Law of Ukraine «On Prices and Pricing».
- Cabinet of Ministers Resolution No. 650 on price regulation for certain types of food products.
- Cabinet of Ministers Resolution No. 957 on minimum wholesale selling and retail prices for certain types of alcoholic beverages.
- RAU: price positioning of ATB private labels.
- «Silpo»: rules of the «Vlasnyi Rakhunok» program.
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