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Markup is a term used in Marketing to indicate how much the price of a Product is above the cost of producing and distributing the product. It can be expressed as a fixed amount or as a percentage. There are numerous variations of each. AS A FIXED AMOUNT assume: retail list price = $1.99 and the product cost is $1.40 MARKUP = price - cost 1.99 - 1.40 = .59 assume the actual selling price was $1.60 MARKDOWN = List price - selling price 1.99 - 1.60 = .39 INITIAL MARKUP = list price - cost 1.99 - 1.40 = .59 MAINTAINED MARKUP = sale price - cost 1.60 -1.40 = .20 AS A PERCENTAGE Algebra: Markup example:
Using the Distributive property of Elementary Algebra :
Solved for Markup: Solved for Original: Markup is the decimal representation of the markup percentage. Original is the original amount/price. Total is the marked up amount/price. Specific: INITIAL MARKUP % = initial markup / sale price .59 / 1.99 = 29% MAINTAINED MARKUP % = maintained markup / sale price .20 / 1.60 = 13% MARKUP % ON COST = markup / cost .59 / 1.40 = 42% MARKUP % ON PRICE = markup / price .59 / 1.99 = 29% To convert from markup on price to markup on cost: MARKUP ON COST = markup % on price / 1 - markup % on price .29 / (1 - .29) = 42% To convert from markup on cost to markup on price: MARKUP ON PRICE = markup % on cost / 1 + markup % on cost .42 / (1 + .42 ) = .29 PRICE = cost / 1 - markup % on price 1.40 / (1 - .29) = 1.99 COST = price / 1 + markup % on cost 1.99 / (1 + .42) = 1.40 PRICE = markup / markup % on price .59 / .29 = 1.99 SOME CUSTOMARY MARKUP PERCENAGES FOR RETAIL BUSINESSES Using the formula (price - cost) / price
''See also : Marketing , Pricing , Cost-plus Pricing , Production, Costs, And Pricing '' |
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