Margin Magic: Four Steps to Building Greater Profit

A retail operation’s margin dollars become the pool of money from which all other expenses and potential profit will come. Essentially, the sales line doesn’t really matter, and all eyes should be on the margin line.

Typically, a catalog operation works on a slightly higher margin percentage than a retail store. A common retail margin is 50 percent, which frequently is referred to as “keystone.” This means the retailer is doubling the cost for the retail price. However, the marketing costs of catalog operations (mailing expenses) normally are greater than the marketing costs (advertising) for retail operations of comparable sizes, and so common catalog margins are closer to 60 percent.