How to price what you sell without eating your own margin
Ask a shopkeeper what their margin is and you'll usually get a confident number for one or two items — the ones they buy most often. For the rest of the shelf it's a guess. That guess is where the money leaks.
Markup and margin are not the same number
These two get mixed up constantly, and the gap between them is real money.
Buy at ₹80, sell at ₹100. Your markup on cost is 25% — ₹20 on ₹80. Your margin on the selling price is 20% — ₹20 on ₹100. Same sale, two different numbers. If you plan in "25%" while your reports talk in "20%", everything you work out is off by a fifth.
Pick one and stick to it. Most shops find margin-on-selling-price easier, because that's what the reports show.
The discount trap
A 10% discount does not cost you 10%. It comes straight out of the margin.
Take that ₹100 item with ₹20 of margin in it. Knock off ₹10 and you've handed over half your profit on that sale — to earn the same money you'd now have to sell two. This is why "thoda kam kar do" is worth thinking about item by item, rather than as a blanket habit.
Fast movers with decent margin can carry a discount. Slow, thin-margin items almost never can.
Don't price the whole shop the same way
Shops that do well tend to split the shelf in two:
- Things people know the price of — oil, atta, a popular soap. Keep these sharp. Customers price-check them and they're what bring people through the door.
- Everything else, where nobody has a reference price in their head and a normal margin holds without anyone blinking.
Giving up a little on the first group is fine, as long as the second group is priced properly.
Your cost is more than the purchase price
Transport, breakage, the packet that sat until it expired — all of it comes out of the same margin. If you're pricing off the supplier's rate alone, your real margin is thinner than the number you have in your head.
Then go and check the actual figure
Guessing is the whole problem. Once your billing knows what each item cost you, it can tell you the margin on every sale — including which bills and which customers actually made you money and which ones didn't. That list is usually a surprise.
BazarBook keeps cost against each product and shows gross margin and profit on your dashboard, with profit broken down bill-wise and party-wise in the reports. (Reports are on the Medium plan.)
Try BazarBook free for 7 days and find out what your margin really is.