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Mark On Markup and Markdown

The document defines key terms related to pricing strategies: markup, mark-on, and markdown. Markup refers to increasing prices from cost, markdown decreases prices, and mark-on is the difference between cost and selling price. Formulas show how to calculate selling price from cost and markup percentage. Examples demonstrate calculating markup rates and prices after additional mark-ons or markdowns.

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Shane Viray
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2K views7 pages

Mark On Markup and Markdown

The document defines key terms related to pricing strategies: markup, mark-on, and markdown. Markup refers to increasing prices from cost, markdown decreases prices, and mark-on is the difference between cost and selling price. Formulas show how to calculate selling price from cost and markup percentage. Examples demonstrate calculating markup rates and prices after additional mark-ons or markdowns.

Uploaded by

Shane Viray
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
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MARK-ON, MARKUP AND MARKDOWN

• MARKUP IS HOW MUCH TO INCREASE PRICES AND MARKDOWN IS HOW MUCH TO


DECREASE PRICES AND MARK-ON IS THE DIFFERENCE BETWEEN THE COST OF GOOD
AND ITS SELLING PRICE, IT IS ALSO REFERRED TO AS THE MARKUP PRICE. MAR-ON
PRICE IS THE PRICE AT WHICH THE COMPANY ACHIEVES PROFIT, AFTER ALL ITS
PRODUCTION COSTS HAVE BEEN INCURRED.
FORMULAS:
• MARKUP:
MARKUP= SELLING PRICE – COST PRICE OR MU= S-C
SELLING PRICE= COST + MARKUP OR S= C+M
MARKUP CAN ALSO BE DEFINE AS THE SUM OF THE EXPENSES (E) AND PROFITS (P).
MARKUP= EXPENSES + PROFITS OR M= E+P
GIVEN ALL THE FORMULAS ABOVE, WE CAN SOLVE FOR THE SELLING PRICE AS:
SELLING PRICE= COST + EXPENSES + PROFIT OR S= C+E+P
  
The formula for the rate of Markup is based on cost denoted by Mc is given by:
Mc(%)= (100) or Mc(%)= (100)
The formula for the rate of Markup based on selling price denoted by Ms is given by:
Ms(%)= (100) or Ms(%)=

 MARK-ON:
MARK-ON= PEAK SELLING PRICE – REGULAR SELLING PRICE or MO=PS-S
 MARKDOWN:
MARKDOWN= ORIGINAL or SELLING PRICE – SALE PRICE or MD= S-SP
Examples:

1.   The cost of a new pair of sunglasses is P4,500. The selling price is P8,000. What is the rate of markup
based on cost?
Sol’n.:
Since S=C+M, we have M=S-C
M=S-C
=P8,000-P4,500
=P3,500
Computing for the rate of markup based on cost, we get
Mc= (100)= (100)=0.7778(100)=77.78%
2.
   the markdown rate if the DVD was originally priced at P290 and was sold at P240
Find
Sol’n.:
Markdown= Original price – Sale price
= 290-240
= 50
Markdown rate=1- = 1- = = = 17.24%
3. Manuel owns a flower shop in Dangwa. He knows that a lot of male customers will buy roses few days
before Valentine’s Day. The cost of a bouquet of roses is P80. A week before Valentine’s Day, the rate of
markup based on the selling price of the bouquet is 10%. Manuel knew that even if he increases the selling
price of bouquet of roses, people will still buy it. So he decided to put a mark-on of 5% to its selling price.
a. How much is the actual selling price?
b. How much is the markup?
c. How much is the additional mark-on?
d. How much is the new selling price after additional mark-on?
Sol’n.:
a. Since M=0.10S and S=C+M
S =P80+0.10S
0.9S =80
S=P88.89
b. The markup is therefore MU=S-C
=P88.89-P80
=P8.89
c. The additional mark-on is given by Mo=5%
=0.05(88.89)
=4.45
d. The new selling price is computed by
new selling price (NS)= S+Mo
=P88.89+P4.45
=P93.34
Try:
A new pair of shoes costs P5,500. The rate of
markup based on the selling price is 15%.
What are the selling price and the markup?
Sol’n.:
M= 0.15S
S= C+M
S=5,500+0.15S
0.85S=5,500
S=P6,470.59

To compute the markup


M=S-C
=6,470.59-5,500
=P970.59

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