Keystone Markup - How Prices Are Made

Any item re-selling at twice the price for it was bought is said to have  keystone markup.

As a customer, you go into a shop and buy certain clothing items for very different and - in some cases - ridiculous prices. Either you’re someone who likes good bargains, then you pay about 20 Dollars for a T-Shirt. Or you are a lover of certain brands, then you might be happy to pay five times that price for one shirt to put on. But how are prices generated and who does it?

Factory-Retailer-Shop

The keystone markup is the most basic concept that describes how the price of an item multiplies while it goes from the factory to a retailer and then to the actual shop that many of us - at least many women - love to browse and scrabble around.

How the Keystone Markup Works

To break it all down: A whole suit, for example, is produced at a factory. The finished product is sold to a retailer for 50 Dollars. The retailer in turn sells the suit to a shop and doubles this price. Therefore, a shop pays 100 Dollars for a suit that has before been sold for 50 Dollars.

In order for the said shop to make money, another doubling is made to this price. Consequently, in this example, when you enter a shop to buy a suit, you pay 200 Dollars for it. The price for this suit developed throughout the process of its distribution. In short, “any item selling at twice the price for it was bought is said to have a keystone markup”, according to Business Dictionary. This comes down to a gross margin of 100 percent for both included parties. Naturally, it is not always that straightforward. This is just to shine a light on how basic economic principles work in the world of retail and fashion.

Cutting the Middle Man

Back to this troika of factory, retailer and shop. At Hundred Dollar Suits, we just cut the middle man. Therefore, we can literally half the price of our suits. It is that easy and everybody saves a lot of money while looking stunning in their new Hundred Dollar Suit. Transparency is one of the keystones of Hundred Dollar Suits.

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