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Pricing Markup & Markdown Basics

Markup refers to the difference between the cost and selling price of a good. It is calculated as a percentage above the cost. The formula for calculating markup percentage is: Markup Percentage = (Markup/Original Cost) x 100. For example, if a product costs $25 and is sold for $40, the markup amount is $40 - $25 = $15. The markup percentage is (Markup/Original Cost) x 100 = ($15/$25) x 100 = 60%. Formulas can also be used to calculate markdown percentage and final selling price when discounts are applied.

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Angeline Curioso
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1K views29 pages

Pricing Markup & Markdown Basics

Markup refers to the difference between the cost and selling price of a good. It is calculated as a percentage above the cost. The formula for calculating markup percentage is: Markup Percentage = (Markup/Original Cost) x 100. For example, if a product costs $25 and is sold for $40, the markup amount is $40 - $25 = $15. The markup percentage is (Markup/Original Cost) x 100 = ($15/$25) x 100 = 60%. Formulas can also be used to calculate markdown percentage and final selling price when discounts are applied.

Uploaded by

Angeline Curioso
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd

Markup refers to the difference between the selling

price of a good or service and its cost. It is expressed as


a percentage above the cost. In other words, it is the
added price over the total cost of the good or service
that provides the seller with a profit.
FORMULA FOR MARKUP PERCENTAGE
WHERE:
THEREFORE, THE FORMULA CAN BE EXPRESSED AS:
EXAMPLE:
FIRST, I'LL CALCULATE THE MARKUP IN ABSOLUTE
TERMS:
THEN I'LL FIND THE RELATIVE MARKUP OVER THE ORIGINAL
PRICE, OR THE MARKUP RATE: ($35) IS (SOME PERCENT)
OF ($40), OR:
SELLING PRICE
FORMULA:
EXAMPLE
THE MARKUP IS 40% OF THE $25 COST, SO THE MARKUP IS:
THEN THE SELLING PRICE, BEING THE COST PLUS
MARKUP, IS:
ANSWER:
SOME FORMULAS:

• 1. Markup = markup percent x original price


• 2. Selling price = markup price + original price
• 3. Mark down price = Mark down rate x original price
• 4. Selling price = original price – mark down price

•
EXAMPLE 1.

• The store piece of a t-shirt is $50. If the


markup set by the store is 30%. Calculate the
markup price set by the store on the t-shirt.
FORMULA:
MARKUP = MARKUP PERCENT X ORIGINAL PRICE

MP= 30% x $50


100
= 0.3 x $50
MP= $15
EXAMPLE 2.

• The cost price of a video player is $250. The markup


percent set by the store is 30%. Calculate the markup
price set by the store on the video player. Also, find the
selling price of the video player.
FORMULA:
MARKUP = MARKUP PERCENT X ORIGINAL PRICE

MP= 30% x $250


= 0.3 x $250
MP= $75
FORMULA:
SELLING PRICE = MARKUP PRICE + ORIGINAL PRICE

SP= $75 + $250


SP= $325
EXAMPLE 3.

• The store price of a jeans is $50. If the


discount given by the store is 45%, calculate
the discount amount offered by the store on
the jeans.
FORMULA:
MARK DOWN PRICE = MARK DOWN RATE X ORIGINAL PRICE

MD= 45%x $50


= 0.45 x $50
MP= $22.5
EXAMPLE 4.

• The store price of an object is $35. If the


discount offered by the store is 25%.
Calculate the discount amount and selling
price of the object.
FORMULA:
MARK DOWN PRICE = MARK DOWN RATE X ORIGINAL PRICE

MD= 25%x $35


= 0.25 x $35
MP= $8.75
FORMULA:
SELLING PRICE = ORIGINAL PRICE – MARK DOWN PRICE

SP= $35 - $8.75


SP= $26.25
MARK DOWN RATE FORMULA:

• MARK DOWN RATE = MARK DOWN PRICE /


ORIGINAL PRICE X 100
EXAMPLE

• An item that regularly sells for $425 is


marked down to $318.75. What is the
discount rate?
WE NEED TO GET THE MARK DOWN FIRST SINCE IT IS NOT
GIVEN.
FORMULA:

MARK DOWN PRICE = SELLING PRICE – ORIGINAL PRICE


MDR = $425 - $318.75
MDR= $ 106.25
THEN SOLVE FOR THE MARK DOWN RATE
FORMULA:

• MARK DOWN RATE = MARK DOWN PRICE /


ORIGINAL PRICE X 100
MDR= $ 106.25 / $425
MDR= $ 0.25 X 100
MDR= 25 %

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