Cost-plus pricing examples from real retail categories

Cost-plus pricing is the method every retailer starts with and few ever fully retire. Take the landed cost, apply a markup, ship the price. It is transparent, fast, and defensible in a margin review. It is also the reason plenty of catalogs leave money on the table. Retailgrid works with cost-plus rather than against it - using cost as the floor, then letting competitive and demand signals decide where the price actually lands.

The formula, and the part people get wrong

Selling price = landed cost × (1 + markup), where landed cost includes freight, duty, handling, and returns provision - not just the invoice.

The common error is confusing markup with margin. A 30% markup on €10 gives €13, which is a 23% gross margin. Category teams pricing to a "30% target" without agreeing which number they mean end up short by several points across thousands of SKUs.

Grocery and FMCG

A 500g pasta sourced at €0.68 landed, with a 22% category markup, prices at €0.83 - rounded to €0.89.

Grocery runs thin markups and high velocity, so cost accuracy matters more than sophistication. The trap is uniformity. Pasta is a known-value item that shoppers price-check; the specialty sauce beside it is not. Applying the same markup to both underprices the sauce and overprices the traffic driver. Food and beverage pricing usually needs cost-plus as a base with KVI overrides layered on top.

Fashion

A jacket landed at €42 with a keystone markup (2×) lists at €84, typically presented as €89.

Fashion is where cost-plus creates the biggest structural distortion, because the initial price exists mainly to support the markdown ladder. Full-price sell-through of 55% means the effective realised margin is far below the ticket. Retailers who price cost-plus and then discount reactively usually discover their true markup was closer to 1.4× than 2×.

Electronics

A monitor landed at €156 with a 12% markup prices at €174.72, listed at €179.

Consumer electronics is the category where cost-plus fails fastest. Prices are transparent, comparison shopping is universal, and a €10 gap moves volume. Here cost-plus defines the absolute floor and nothing else. Competitor price tracking has to set the ceiling, which is why price optimization software matters more in electronics than markup tables do.

Hardware and DIY

A cordless drill landed at €61 with a 35% markup prices at €82.35, listed at €84.90.

Long-tail hardware is the best remaining case for pure cost-plus. Thousands of low-velocity SKUs have no reliable competitor match and no meaningful elasticity data. Rules-based markup by product class is faster and more accurate than trying to optimise noise.

Where cost-plus should stop

Cost-plus ignores three things: what competitors charge, what customers will pay, and what the SKU does for the basket. That is acceptable on the long tail and expensive on the top 500.

The practical model most mid-market teams settle on is layered. Cost-plus sets the floor. Price optimization proposes the margin-optimal price within that floor, scored for confidence, with elasticity and competitor position factored in. Rules handle rounding, caps, and category discipline.

Getting the terminology aligned across merchandising and finance helps more than it sounds - the pricing glossary is a useful reference when markup, margin, and MSRP are being used interchangeably in the same meeting.

Cost-plus is a starting point, not a strategy. The retailers who outperform are the ones who know exactly which SKUs deserve more thought - and have the pricing tools to give it to them.

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