For a supplier to be a strong partner to their retailers and buyers, it’s important to speak the same language—especially when it comes to numbers. This cheat sheet covers key retail formulas that help suppliers make smarter business decisions, defend shelf space, evaluate pricing strategies, and track profitability. Whether you’re prepping for a line review, pitching a new item, or analyzing performance across retailers, these formulas will help you back your story with data.
Sales & Profitability Metrics
Digital Mix (%)
Scenario:
You’re preparing for a line review with Walmart and want to show how much of your product’s sales come from Walmart.com versus in-store, to justify pushing more digital marketing or online-exclusive items.
Sales Velocity
Scenario:
During your modular review cycle, your team needs to justify why your item deserves more shelf space. You check your sales velocity to identify which regions your item performs strongest in. If your velocity is significantly higher in the Southeast, for example, you can recommend store expansion in that region.
Average Sell Price (ASP)
Scenario:
You’re reviewing price elasticity for a SKU and want to understand the true price shoppers are paying across different regions and promotions — not just listed price. ASP is also helpful during cost change discussions, such as when tariff impacts affect your margins. For example, Walmart may be hesitant to approve a price increase based on customer perception. You pull Average Sell Price data and show that the item sees minimal sales lift during rollbacks or promotions—indicating that customers are willing to pay full price. This insight helps support your case during cost negotiations.
Average Unit Retail (AUR)
Scenario:
You’re comparing AUR across multiple retail partners to understand pricing trends and shopper behavior. One item is performing better in-store at a higher AUR than online. This insight helps you fine-tune pricing strategies, adjust marketing investments by channel, and guide future inventory decisions for each retailer.
Dollars per Linear Inch
Scenario:
Your retailer is doing a shelf reset and asks for justification on why your product should get more space. You show that your product drives higher sales per inch compared to competitors.
Profit Dollars per Linear Inch
Scenario:
You’re trying to defend shelf space during a modular update. You demonstrate not just sales volume, but also how your item drives higher profit per inch than lower-margin competitors.
IMU vs. Maintain Margin
Scenario:
A buyer flags that your item is margin-dilutive due to markdowns. You use IMU to show the planned margin and Maintain Margin to track performance and explain variance (e.g., due to promotional plans or competitive pricing shifts).
Penny Profit
Scenario:
You’re pitching a new item to a retailer and need to show that—even at a lower price point—it yields a higher penny profit than a slowermoving, higher-priced item they currently carry.
Profit Rate
Scenario:
A buyer is focused on improving their category margin. You highlight your SKU’s profit rate to prove it’s not just a volume driver but also adds value to category profitability.
First Cost vs. Store Cost
Scenario:
You’re renegotiating cost with a buyer and they’re quoting “store cost” (also called “landed cost”) including freight and fees. You need to break down how that compares to your first cost and clarify which version is impacting their margin.
Gross Margin Return on Inventory Investment (GMROII)
Scenario:
You’re renegotiating your cost structure with a retailer. To support your case, you show how your product maintains a healthy gross margin—even with recent price shifts—making it a reliable contributor to the retailer’s profitability goals.