If you’re looking to boost your profits (and who isn’t?), there’s one magical number you absolutely need to master: Initial Markup (IMU).
Initial Markup is a game-changer. It’s the not-so-secret ingredient to running a successful, profitable store. And I know—it might sound boring or complicated. But trust me, once you get a handle on it, you’ll see how empowering it is to take control of your pricing and your profits.
So, let’s break it down. Here’s what IMU is, why it’s so important, and—most importantly—how you can start using it today to grow your business.
What Is Initial Markup (IMU)?
Let me make this super simple:
If a product costs you $40 and you price it at $80, your Initial Markup is 50%. The markup represents 50% of the selling price, with the cost represents the other 50% of the selling price.
Now, here’s the magic number you need to aim for: 60%.
To hit that 60% IMU, you’ll use a 2.5x multiplier. So, if an item costs you $40, you’d price it at $100 (cost x 2.5).
Why Is IMU the Key to Retail Success?
Your Initial Markup isn’t just a number. It’s the foundation of your store’s financial health and the secret to keeping your business not only afloat but thriving. Here’s why it matters:
- Covers Your Costs: IMU makes sure you’re pricing your products to cover rent, salaries, utilities, and all the other expenses of running a store.
- Drives Profitability: A higher Initial Markup means bigger gross margins, giving you more flexibility for promotions or markdowns.
- Supports Sustainable Growth: When you price your products correctly from the start, you’re not relying solely on volume to make ends meet.
3 Simple Steps to Increase Your Initial Markup
This is where the magic happens! Here’s how to start increasing your markup today:
- Start with What’s Already in Your Store:
Take a walk around your store and check the pricing on products with an IMU lower than 55%. Adjust those prices to get closer to that 60% sweet spot. - Update New Shipments:
When new inventory arrives, set prices with the 2.5x multiplier in mind. And if you have similar products already on the floor, raise their prices to match. - Educate Your Team:
Your team is your secret weapon! Train them to sell the value of your products, not just the price. When they can confidently explain why an item is worth the price, customers are more likely to buy.
A Quick Note About MAP Pricing
I get it—some products (like pet food or books) have MAP pricing rules, which means you can’t increase their markup. That’s okay! The goal here is to look at your IMU as an average for your entire store.
For every item with MAP restrictions, you need to find other products where you can hit or exceed that 60% IMU.
Your Next Steps
Let’s get started today! Here’s what you can do right now to start seeing results:
- Calculate the IMU for Your Top 10 Products:
See where you’re already winning—and where there’s room for improvement. - Find One Product to Reprice:
Look for an item where you can raise the price based on its value. (Hint: This is a great way to test the waters!) - Grab My Free Pricing for Profit Guide:
This guide walks you through calculating and optimizing your IMU step-by-step. Download it here!
Why This Matters
Mastering your IMU isn’t just about the numbers. It’s about taking control of your business, building confidence, and creating the kind of profits that let you finally pay yourself what you deserve.
So don’t wait! Start fine-tuning your IMU today, and watch how it transforms your bottom line.
As always, I’m here to cheer you on every step of the way. You’ve got this!
Ready to coach up? If you’re already at 6 figures and ready to scale up to 7 figures, watch our free class: 3 Steps to Maximize Profit & Reduce Overwhelm. If you’re not there just yet, watch: How to Increase Your Sales So You Can Consistently Pay Yourself & Your Staff.
Together, we’ll help you build the profitable, sustainable business you’ve always dreamed of – one that lets you sleep better at night knowing your retail dreams are becoming reality.