The short answer
Start from what the product costs you, decide what share of the selling price you want to keep, and divide: price = cost ÷ (1 − margin). A candle that costs £4 to make, sold at a 50 per cent margin, is £8. Then round to a price that is easy to pay, and check a month later that the margin you planned is the margin you got. The rest of this guide covers the sums, the difference between margin and mark-up, VAT and what to look at afterwards.
Work out your real cost first
Cost price is everything you spend to have one more of the thing to sell, not just the invoice from the supplier.
- What you paid for the item, or the materials in it.
- Packaging: the bag, the box, the ribbon.
- Delivery in, if you pay for it.
- Card fees on the sale, which come out of the price. Your own rate is on your reader's statement; taking card payments on a market stall explains what to compare.
- Your pitch fee, spread across what you expect to sell that day.
Pitch fees and fuel are not the cost of one item, but they have to be paid from the margin. If a pitch costs £40 and you sell fifty things, that is 80p an item you need to cover. Include it in your thinking, even if you leave it out of the unit cost.
Your own time is the cost that most new traders leave out. If an item takes an hour to make and the margin is £4, you have paid yourself £4 an hour. That may be fine for a hobby and wrong for a business.
Margin and mark-up are different things
Both describe the gap between cost and price, but they divide by different numbers, which is why they get muddled.
- Mark-up is the profit as a percentage of the cost.
- Margin is the profit as a percentage of the selling price.
| Cost | Price | Profit | Mark-up | Margin |
|---|---|---|---|---|
| £4.00 | £6.00 | £2.00 | 50% | 33% |
| £4.00 | £8.00 | £4.00 | 100% | 50% |
| £6.00 | £10.00 | £4.00 | 67% | 40% |
| £3.50 | £6.50 | £3.00 | 86% | 46% |
The trap is a trader who says "I add 50 per cent" and assumes they keep 50 per cent. A 50 per cent mark-up is a 33 per cent margin. If your target is the share of takings you keep, work in margin.
Worked examples
Target margin 50 per cent, cost £4. Price = 4 ÷ (1 − 0.5) = 4 ÷ 0.5 = £8.00. Profit £4.00, which is 50 per cent of £8.
Target margin 40 per cent, cost £6. Price = 6 ÷ 0.6 = £10.00. Profit £4.00, which is 40 per cent of £10.
Target margin 45 per cent, cost £3.50. Price = 3.50 ÷ 0.55 = £6.36. Round up to £6.50 and the profit is £3.00, a margin of 46 per cent. Rounding up helped. Rounding down to £6.00 would give a 42 per cent margin, which is below the target.
Use a calculator, and do it once for each product when you set the price. Margins will differ by line, and that is normal: a cheap impulse buy can carry a high margin and a sought-after item a lower one.
Rounding to prices people can pay
After the sum, choose a price a customer can pay without thinking. On a stall that means £5, £6.50 or £10, not £6.36. Round prices make cash quicker, shorten the queue and need fewer coins in your float.
- Round up when the sum is close. £6.36 becomes £6.50. Customers do not notice 14p, and you keep it on every sale.
- Round down only if you have checked the margin. If the rounded price takes you below your target, change the product, the cost or the price point rather than losing it quietly.
- Use a few price points. Four or five prices across the stall are easier to remember and to ring up than thirty different ones.
- Prices ending in .99 are a choice, not a rule. They suit a shop where people pay by card. On a cash stall they cost you time handing out coins.
Mini Till does not add anything to the price. What you type in the Products tab is what the customer pays, so decide the final price before you enter it.
VAT: when it matters
You must register for VAT if your taxable turnover for the last 12 months goes over £90,000, or if you expect it to go over £90,000 in the next 30 days. That is turnover, which means takings, not profit. You can register voluntarily below it. Source: GOV.UK, when to register for VAT. The standard rate is 20 per cent, which covers most goods and services, though some are zero-rated, including books and children's clothes. Source: GOV.UK, VAT rates on different goods and services.
Most small stalls are below the threshold, and then your price is your price: you keep all of it. If you are registered, a price of £12 on the shelf already contains VAT, and the VAT is one sixth of the £12:
| Shelf price | VAT (20%) | Net price | Cost | Profit | Margin on net |
|---|---|---|---|---|---|
| £12.00 | £2.00 | £10.00 | £6.00 | £4.00 | 40% |
Work your margin on the net price, because the VAT goes to HMRC and is not yours. Mini Till treats the prices you enter as including VAT at 20 per cent and shows the VAT inside each sale. If you sell items at different VAT rates, ask your accountant how to treat the figure it shows, because the till uses one rate. What till records HMRC expects covers VAT and record keeping.
Checking your margins afterwards
Pricing is a guess until you look at what happened. After a month or a handful of markets, check three things.
- What sold. Export your sales from Sales history on the till. The file lists the items in each sale with the date, payment method and total, so a spreadsheet can total the units for each product.
- What it earned. Multiply the units by the profit on each. A product that sells well at a thin margin may earn less than a slower one at a fat margin.
- What did not sell. A product that sits unsold after several events is either too dear or not wanted. Cut the price, bundle it, or stop buying it.
The free till does not know your cost prices, so the margin sums happen in your own spreadsheet. Mini Till Pro has a cost field on each product and a margin report with cost and margin per cent, plus a report of stock that is not moving, with a 14 day free trial. If you trade at one stall and sell a few dozen lines, a spreadsheet is enough. If you trade in several places, the report saves the evening.
Change prices gradually and one at a time, so you know what caused any change in sales. A 50p rise on your best seller is easier to read than ten changes at once.
Questions
What is a good margin for a market stall?
It depends on what you sell and what your costs are, so there is no single figure. Work out the margin you need to cover your pitch, your time and your costs, and use that as your floor.
Should I charge more for card payments?
Most traders put one price on the product and absorb the fee. It is simpler for the customer and the queue. Build the likely fee into the price when you set it.
Do I need to charge VAT?
Only if you are registered, which is required when your taxable turnover passes £90,000. Below that it is your choice.
Related reading
- Starting a market stall in the UK, including pricing and stock strategy
- A market stall till that works with no signal
- Stock control guide