Are you an SO - owner of a dance studio - you said you have a successful business but just hired a dance teacher - I am confused
I do mark up costumes, most places do - it is up to you how much to do so. I spend hours and hours of non compensated time picking out the right costumes, ordering costumes, talking with costume companies, etc. etc. Our time is valueable and while I enjoy what I do - I should be fairly compensated for my time.
I set prices for each class $50 for the 7 and unders $60 for the older kids, still very reasonable for my area, but still a reasonable mark up.