Table 1 summarizes how you calculate whether you are within your budget. You know how many of each item you expect to sell. The next decision is how should you price the items. The price must be low enough to attract customers, but high enough to cover your expenses. In a store that sells five hundred different items or more, it is unrealistic to price each item individually.
Operators use percent mark-up on cost, rather than dollar figures, to make pricing easier.
You use percent mark-up on cost by separating the items you buy into groups. You then add a uniform mark-up to each item in the groups. Before you open your business, you should know the standard industry mark-ups of the items you plan to sell. Once you have calculated the mark-up for television sets, you should do the same thing for refrigerators. Since refrigerators are expensive items it is common to give them a lower mark-up.