How to set a selling price: cost, kharcha and margin
The selling price formula shopkeepers can use at the counter: full cost per item, margin or markup, rounding, and what a discount really does to profit.
Munshi Team · 18 Oct 2026 · 3 min read
Ask ten shopkeepers how they set a price and most will say "cost plus something". The trouble is the "something" changes with the mood of the day, and the cost they start from is usually only the supplier's bill. Here is a way to set prices that holds up, with the sums done in rupees.
Want the answer straight away? The selling price calculator does all of this for you.
Start from the full cost, not the bill
The supplier's price is only part of what an item costs you. Add what it takes to get it onto your shelf:
- rickshaw, loader or courier charges, divided over the items in the delivery
- bags, packing and labels
- breakage, expiry and items that "go missing"
A carton of 24 bottles at Rs 5,760 is Rs 240 a bottle. The Rs 240 rickshaw for the delivery adds Rs 10 a bottle, so the full cost is Rs 250. Price from Rs 250, not Rs 240, or you lose Rs 10 on every bottle before you start.
Margin or markup: pick one and stick to it
Markup is what you add on top of cost. Margin is the share of the selling price that is profit. They are not the same number:
| Full cost | You want | Selling price | Real margin |
|---|---|---|---|
| Rs 250 | 20% markup | Rs 300 | 16.7% |
| Rs 250 | 20% margin | Rs 312.50 | 20% |
For a margin, divide the cost by (1 − margin). Rs 250 ÷ 0.8 = Rs 312.50. For a markup, multiply: Rs 250 × 1.2 = Rs 300. Many shops say "20%" and mean markup, then wonder why the month's profit looks thin. Our guide on margin vs markup goes deeper.
Round up for the counter
Nobody wants Rs 312.50 at the counter. Round up to a number that is easy to take and give change for: Rs 315 or Rs 320. On cheap items round to Rs 5; on bigger items Rs 10 or Rs 50 is fine. Rounding up is free margin. Rounding down quietly eats it.
What a discount really costs
A 10% discount sounds small. On Rs 315 it is Rs 31.50, and your profit was only Rs 65. So the profit per item drops to Rs 33.50, about half. To earn the same in a day you must sell almost twice as many.
Use discounts for a reason: clearing old stock, a festival offer, or bringing a regular customer back. Don't use them just because the shop next door does.
Keep prices up to date
Supplier rates change every few weeks. When the new bill comes, check the full cost again and update the price, or your margin slides without you noticing. In Munshi POS, each item keeps its cost and selling price together, so the profit report shows straight away when a margin has slipped.
Try your own numbers in the selling price calculator, then start free to have Munshi keep cost, price and profit together for every item.
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