What margin should a shop aim for?

There is no single figure: it depends on your business and your costs. What matters is knowing your real cost and refusing to sell below it. A fair price sits between your cost and the market price, not below both.

Why do my margin rate and markup rate differ?

Because they are not measured against the same amount. The margin rate divides the margin by the purchase cost; the markup rate divides it by the selling price. With a margin of 5,000 FC, you get 38% in one case and 28% in the other.

Should I update the purchase price on every delivery?

Yes, even when the price has not moved. It is the only way to get an accurate margin in the reports: a forgotten purchase price distorts the margin from the supplier's first increase.

How do I calculate the real cost of an imported product?

Add transport, customs duties if any, and a share for breakage or unsellable items to the supplier invoice price. That total is what counts, not the price shown on the invoice.

Calculating your margin and selling price

Margin and markup are not the same thing. Here is how to calculate correctly, with a worked example.

Updated October 12, 2026 · 6 min read

The true purchase price

The price paid to the supplier is not the cost of the product. You have to add transport, customs duties if any, and a share for breakage or unsellable items.

A carton bought for 120,000 FC, transported for 15,000 FC, with one product in twenty arriving damaged, costs a little more than the 120,000 FC on the invoice. That real cost is what to keep, not the invoice price.

Margin or markup: two different calculations

The margin is what is left in your pocket: selling price minus real cost. The margin rate relates that margin to the cost. The markup rate relates it to the selling price. The two are often confused in conversation, and that is where prices get set wrong.

Example: real cost 13,000 FC, selling price 18,000 FC. The margin is 5,000 FC. The margin rate is 38 per cent, the markup rate 28 per cent. Same margin, two percentages.

The three formulas to remember

Everything fits in three lines. Written down once, they stop you confusing the two rates during a negotiation.

Margin = selling price − real cost

Margin rate = margin ÷ real cost × 100

Markup rate = margin ÷ selling price × 100

The table below applies these calculations to four examples (illustrative amounts, in FC). The margin is the same row by row, but the price and the percentage change: that is exactly what misleads you when you reason from memory.

Real cost	Selling price	Margin	Margin rate	Markup rate
13,000 FC	18,000 FC	5,000 FC	38%	28%
10,000 FC	15,000 FC	5,000 FC	50%	33%
20,000 FC	25,000 FC	5,000 FC	25%	20%
8,000 FC	12,000 FC	4,000 FC	50%	33%

Setting the price, in order

Start from the real cost, choose the margin you are aiming for, add it, then round to an easy price to give change for. Then compare with what is practised around you: a fair price sits between your cost and the market price, not below both.

A price that is too low cannot be made up with volume when the margin is zero. Selling a lot without earning only moves stock.

Checking in the reports

The margin shown in the reports is only accurate if purchase costs are up to date in the app. A purchase price entered once and never updated gives a wrong margin from the supplier's first increase.

Get into the habit of correcting the purchase price on every new delivery, even when the price has not moved. It is the only way to know whether a product makes or loses you money.

The common mistakes

Forgetting transport and breakage in the cost. Confusing margin rate and markup rate in a negotiation. Slashing prices to clear dead stock, which also damages the price of the product that sells well. And never looking at margin per product, only at the day's revenue.

To apply these calculations without a spreadsheet, the stock and reports feature of MerchantHQ shows the margin per product; the starting point for prices is on the clearing dead stock page.

Frequently asked questions

What margin should a shop aim for?: There is no single figure: it depends on your business and your costs. What matters is knowing your real cost and refusing to sell below it. A fair price sits between your cost and the market price, not below both.
Why do my margin rate and markup rate differ?: Because they are not measured against the same amount. The margin rate divides the margin by the purchase cost; the markup rate divides it by the selling price. With a margin of 5,000 FC, you get 38% in one case and 28% in the other.
Should I update the purchase price on every delivery?: Yes, even when the price has not moved. It is the only way to get an accurate margin in the reports: a forgotten purchase price distorts the margin from the supplier's first increase.
How do I calculate the real cost of an imported product?: Add transport, customs duties if any, and a share for breakage or unsellable items to the supplier invoice price. That total is what counts, not the price shown on the invoice.

Go further

Comparison of tills for a business in Africa — the 7 criteria that decide.
What does an offline till change? — and the real cost of free solutions.
Point-of-sale software in the DRC — what a till changes for a Congolese business.
MerchantHQ's features — and pricing.

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