Because there are so many variables, profit margin is best used for comparisons among stores using similar revenue and business models. The retail pricing structure and type of staff used to operate the store are two major cultural commerce model variances that can have a significant impact on the overall profit margin.
On the revenue side 'keystoning', the doubling of product cost to determine the retail price, is insufficient because it does not produce enough gross margin to cover costs.
We have worked on over 400 museum store projects and it is our experience that on the cost side stores at your level of revenue, and smaller, span the range from fully paid to completely volunteer staffs. If your store is fully run by volunteers the profit margin can be in excess of 25%. Stores with a fully compensated and benefited staff hover closer to 5-9%. Stores associated with institutions with more generous benefit plans, such as state government and universities, can be an even more challenging profit margin environment.
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Andrew Andoniadis
Museum Store Consultant
Andoniadis Retail Services
Portland OR
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