Corals are marked up at a high margin because there are a multitude of costs associated with keeping/selling them.
Yes, I understand that and if you're doing everything right to keep the corals alive and healthy, as we were, there's still a decent margin to discount the corals from normal, competitive prices without losing money. Even running MH and T5, chillers, kalk reactors, and phosphate reactors on 15 coral tanks, paying for rent and A/C in a 3000 sq ft high-bay South Florida storefront, etc. we could cover costs and losses at a bit over 2x markup and we made reasonable profit at 3x, which was the
minimum we sold most pieces for (show pieces, which we paid close to retail for ourselves, were the exception). A lot of corals like acans and chalices we could mark up as much as 12x, not because we had to do it to cover costs- we still broke even at 2x, but because that was the going retail price for them. The biggest money-makers though were zoas,
Xenia, and GSP. We could make probably 30 $10 frags of GSP from one rock that cost us $15, so that comes out to about 20x markup and the break-even point for them is even lower than 2x since they don't require the heavy duty lighting and filtration used on the other tanks.
If you're not running strong lighting, haven't invested in chillers and reactors, and your shop isn't in such a high-rent area your operating costs are going to be lower, but the going retail price for the corals is the same. There's more room to discount without taking a loss.
When you're dealing with livestock, losses are expected though and they're built into the markup. Occasionally selling a coral at a loss isn't a big deal, especially if it would have been written off completely anyway if it died in the store instead. Ideally, if a store isn't taking care of their corals they would be taking a loss on most of the pieces and would go under. Unfortunately though, the people you meet here at RC aren't representative of hobbyists IME. As the saying goes, there's a sucker born every minute. About 90% of our customers relied completely on us for their information about the corals and if we were dishonest we could easily sell them our unhealthy or dying corals at full price and they would be none-the-wiser. The persistence of the trade in bleached sebaes, dying goniopora, and dyed corals proves that there's still a strong market for unhealthy animals at full-price.