How to Price Convenience Store Items, With a Calculator

To price a convenience store item, work out what one unit costs from the case, divide it by one minus the category's target margin, and round up to a price ending in 9. Price = unit cost ÷ (1 − target margin). A case of 24 colas at $27.60 is $1.15 a bottle; at a 52% target, $1.15 ÷ 0.48 = $2.40, so $2.49. That's the floor. Then check it against the price printed on the pack, if there is one, and what the store down the street charges, and decide. In the example below, a Memphis store prices eleven items and ends up with a 58% margin across a week's sales of them. Below is the formula, target margins and markups by category, the eleven items, and a free calculator.

The short version

• Unit cost = case cost ÷ units in the case.
• Price at target = unit cost ÷ (1 − target margin), rounded up to end in 9.
• Set a target margin for each category: high for coffee and drinks, low for milk and eggs.
• A price printed on the pack by the maker is the price customers expect.
• Check the store down the street: the formula is the floor, the market is the ceiling.
• Keep staples near the target; they're why people stop in.
• Reprice when a vendor's cost goes up.
• TaroStack shows margin by product on what each delivery cost, and flags a vendor's rising prices. More below.

The formula

Margin is a share of the price; markup is a share of the cost. A 50% margin is a 100% markup, which is why a vendor's "double it" and a 50% margin are the same thing. The difference is in markup vs margin, and pricing from cost in general in cost plus pricing example.

Target margins and markups by category

These are the example store's targets, not rules. Milk and eggs carry a low margin because people compare their price and come in for them; the coffee bar carries a high one because the cup costs little and the price is set by what a cup costs elsewhere.

An example: eleven items at a Memphis store

Bluff City Market, a made-up convenience store in Memphis, Tennessee, I use in these examples, prices these items:

A week of these eleven sells $1,113.19 and keeps $646.84, 58.1%. Five decisions moved prices off the formula. Water at the formula would be 39¢, and every store nearby sells it for $1.29, so it's $1.29: the formula is a floor, not a price. The energy drink and the chocolate bar go to the competitor's price, because $3.09 and $1.79 give away margin nobody asked for, and the coffee goes to $1.89, ten cents under the competitor's cup. Milk, eggs and bread stay at the formula, below the competitor, because they're what brings someone in for the drink and the snack. The chips have a price printed on the bag, $2.19, so that's the price. The hot sauce from a Memphis maker sells at the maker's suggested $8.99.

When costs change

A vendor's price goes up a few cents on one invoice and the shelf price stays the same, so the margin shrinks without anyone deciding it should. Compare each invoice's cost with the last one, and reprice the item when its margin falls below the category's target. A sheet for watching what vendors charge is in supplier price tracking template, and a price list to keep the store's prices in one place in price list template.

Get the calculator

Download the convenience store pricing calculator. Three sheets: target margins by category; prices, where you type each item's category, case cost and case pack and the unit cost, the price at the target and that price rounded up to end in 9 fill in, then the printed price, the competitor's price, your price and how many sell a week, with the margin, markup, sales and gross profit filling in; and a week's sales and gross profit across the items. A rounded price above the competitor's turns red. It's an ordinary Excel file with no macros, and it works in Google Sheets, LibreOffice and Numbers.

Where this stops working

Eleven items price easily. Three thousand don't, and each vendor's invoice changes a few of their costs every month. A calculator holds the cost you typed last time; it can't say which items' margins slipped when the soda route's prices went up, or what an item cost on the delivery that's on the shelf now.

How TaroStack does it

TaroStack shows margin by product on what each delivery cost, and flags a vendor's rising prices.

Margins on real costs. Each delivery is received at what it cost, so margins by product use what the item actually cost, not last year's number.

Rising prices flagged. A price-creep report by supplier shows which vendor's prices are going up, so the items to reprice are on a list instead of discovered at the end of the month. A photo of a vendor's invoice is read into rows to check before anything is saved.

Losses with a reason. Every adjustment carries its reason, expired, damaged or lost, so the shrink that eats into a category's margin is reported by reason and item, not hidden in the month's total.

Margin reports, price-creep by supplier and receiving are on every plan, from $49 a month, with no limit on items; TaroStack connects to Square. The first 30 days are free, with no credit card. If you'd like a hand setting up, ask, and we'll do it with you.

Questions people also ask

What is the average convenience store markup?

It varies by category. In the example, targets run from a 43% markup on dairy, a 30% margin, to 300% on coffee, a 75% margin, and the eleven items average a 58% margin.

How do you calculate the price of an item in a store?

Divide the unit cost by one minus the target margin and round up: a $1.15 cola at a 52% target is $2.40, so $2.49.

Should I price above the printed price on a pack?

A printed price is what customers see on the pack, so selling above it is rarely worth it. In the example the chips sell at their printed $2.19.

How do you price cheap items?

By the market. Water costs 18¢ a bottle and the formula says 39¢, but the stores nearby charge $1.29, so it's $1.29.