Initial and maintained markup calculator for retail

Initial markup (IMU) is the difference between the original retail price and the supplier cost, as a percentage of that retail price. Maintained markup (MMU) is the same difference measured on the price customers paid after markdowns, so it shows the margin a product kept. This free initial markup calculator takes three prices and returns both percentages plus the markdown that separates them.

Every percentage on this page is of the retail price, not of cost. That is the convention in merchandise planning, and it differs from the cost-based markup most pricing tools report. Nothing you enter is saved or sent anywhere, and the tool does not read inventory or POS data.

How to use this calculator

1. Enter Unit cost from the supplier: what you paid per unit, before any retail pricing.
2. Enter Original retail price: the first ticket price. It must be greater than zero.
3. Enter Average actual selling price: the average price customers paid across all units, including those sold at a markdown. It must be greater than zero and cannot exceed the original retail price.
4. Select Calculate. To load the sample figures first, select Use example.

Each field accepts a number from 0 to 1,000,000,000. Results show labeled values to two decimals and the step-by-step arithmetic.

IMU formula and MMU formula

Initial markup % = (original retail price − unit cost) ÷ original retail price × 100

Maintained markup % = (average actual selling price − unit cost) ÷ average actual selling price × 100

Markdown from the original price % = (original retail price − average actual selling price) ÷ original retail price × 100

The imu calculation uses the price you intended to sell at. The maintained figure uses the price you did sell at, which is why it is the one that lands in gross margin. The third line is the markdown that explains the gap, measured against the original ticket.

Maintained markup example

The $25 ticket less the $15 cost leaves $10, and $10 ÷ $25 × 100 gives an initial markup of 40%. Customers paid $22 on average, so the margin kept is $7, and $7 ÷ $22 × 100 gives a maintained markup of 31.82%. The $3 between the ticket and the average price is a markdown from the original price of 12%. The results panel shows "Initial markup (IMU)" 40%, "Maintained markup (MMU)" 31.82% and "Markdown from the original price" 12%.

Initial markup vs maintained markup

Buyers set the initial figure high enough to cover planned markdowns, shrink and employee discounts and still land on the gross margin the store needs. The maintained figure is the result after those reductions. When the two are close, the product sold near its ticket. A wide gap means heavy markdowns, and a maintained figure below the store's target margin means the category is not earning its space, whatever the ticket said. In the example, a 12% markdown took the markup from 40% to 31.82%, a drop of 8.18 points, because the $3 lost came entirely out of the $10 margin.

The margin and markup calculator works the other way. It takes a cost and a target and returns a selling price, and its markup is a percentage of cost, the usage Investopedia's markup entry describes. The same $15 cost and $25 price is a 40% margin on retail and a 66.67% markup on cost. Use this page when reviewing what a product kept and the margin tool when setting a price. The markdown calculator sizes a single reduction in dollars and percent, the GMROI calculator relates the margin dollars you kept to the inventory you held, and the sell-through calculator shows how fast the units moved. Our initial markup guide explains how to set the first price from a planned margin and expected reductions.

Frequently asked questions

How to calculate IMU

Subtract the unit cost from the original retail price, divide by the original retail price and multiply by 100. On the sample figures, ($25 − $15) ÷ $25 × 100 = 40%. If you know the cost and the margin you want, rearrange it: original retail = cost ÷ (1 − planned IMU). A $15 cost at a planned 40% gives $15 ÷ 0.60 = $25.

What is the IMU meaning in retail

IMU stands for initial markup: the planned margin built into the first ticket price, expressed as a percentage of retail. The abbreviation has unrelated meanings in texting and elsewhere; in merchandise planning it refers to this figure. Cost of goods sold on a US tax return is built from the same cost figures, as IRS Publication 334 describes (irs.gov), but markup percentages are not reported there.

What does MMU mean

MMU stands for maintained markup. The mmu meaning in a merchandise report is the markup achieved on the average selling price after markdowns, before operating costs. It is the figure to compare with the gross margin target.

Why are the percentages on retail and not on cost

Merchandise plans, open to buy budgets and markdown budgets are kept at retail value, so a markup on retail can be applied to sales to find margin dollars without conversion. For the same prices the retail-based figure is the lower one.

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