Keystone pricing is a pricing strategy. In this case, the retailer just doubles the wholesale cost to determine the selling price of the product. Depending on the type of product, using keystone pricing could lead to a product being priced too high or too low.
If the product has many additional costs like shipment or if they have a slow turnover, a keystone pricing strategy is not right because it will lead to a small selling price. On the other hand, if the product is easy to find, it might be hard to sell it using the keystone pricing strategy.
How to calculate the keystone mark-up?
In order to calculate the keystone mark-up, you will need to multiply the wholesale cost by 1. Let’s look at an example. If the wholesale cost of your product is $10, then the keystone mark-up will also be $10. Finally, the keystone price (the price used to sell the product) is $20.