Margin Math Without a Spreadsheet: The Numbers Every Buyer Should Run

You don't need a spreadsheet to buy well — you need three small sums you can run in your head while looking at a wholesale listing. Buyers who run them every time stop stocking regrets.

Sum one: the gap

Selling price minus cost. A $4 wholesale item you'll sell at $9.99 has a $5.99 gap. Expressed as a share of the selling price, that's your margin (about 60% here); expressed as a multiple of cost, it's your markup (about 2.5×). Retail slang for "doubling" is keystone; impulse and novelty goods often run above it. Know which word your supplier is using — a "50%" can mean two different things.

Sum two: the gap × the speed

Margin velocity is where mediocre-looking items become heroes. A $2 gap that sells daily earns more per month than an $8 gap that sells weekly — from a quarter of the shelf commitment. When comparing two products, always multiply the gap by honest guesses of weekly units. It reorders your preferences instantly.

Sum three: the ceiling test

Start from what your customer will actually pay — the round number that feels easy in your store — and work backwards. If wholesale cost doesn't leave a healthy gap under that ceiling, no amount of liking the product fixes it. The ceiling is set by your neighbourhood, not your costs.

The two-question test, condensed

Facing any new item: What's my gap at the price my customers will pay? and How many will I honestly sell a week? If both answers are cheerful, test a small quantity (no-minimum ordering makes that painless) and let the shelf confirm the math. If either answer requires optimism — pass. There's always another product.

Frequently asked questions

What's the difference between margin and markup?

Same gap, different denominator. A $4 item sold at $9.99 has a $5.99 gap: that's roughly 60% margin (share of selling price) or 2.5× markup (multiple of cost). Know which one your supplier means by "50%."

What's margin velocity and why does it matter?

The gap times weekly units — profit per shelf per month. A $2 gap selling daily out-earns an $8 gap selling weekly. Judge every wholesale listing by that product, then test small with no-minimum ordering before committing.