What is Mark-up? [Hint: Pricing Architecture]

Jalil Rahman

2d • 1 Minute MBA (Fashion Edition)

Mark-up is how you price your product relative to cost.

Definition

Mark-up = Retail price ÷ Cost

So if something costs £50 and you sell it for £150 then that’s a 3x mark-up.

Why it matters

Mark-up determines your potential margin but there’s an important distinction:

Mark-up is set before the market reacts
Margin is what you actually keep after discounting

So yes you can have a strong mark-up… and still end up with weak margins if you discount heavily.

What most people miss

This is the trap. A lot of brands think pricing high automatically means profitability but it doesn’t! Because once discounting starts, your pricing architecture begins to weaken. And over time, you train the customer to wait. That’s how brands actually lose pricing power.

Bottom line

Strong brands protect mark-up at all costs because pricing discipline is brand discipline.

Discussion