MARKUP AND

MARKDOWN

Prepared by Engr. Vincent John V. Bantolinao, RME

LESSON OBJECTIVES:
• Differentiate markup and markdown

• Demonstrate how markup and

markdown are acquired

• Solved markup and markdown related

problems
 WHAT'S THE
DIFFERENCE?

MARKUP MARKDOWN
MARKUP
- is the amount by which the cost of a
product is increased in order to derive the
selling price.

·An important principle in retail business is

the proper pricing of its merchandise.
·Wrong pricing may lead to small profit or
heavy loss
Example 1:

A gasoline station purchases crude oil at a cost of P50 per
liter. Twenty percent of the cost goes to their operating
expenses, and the goal of the business is to earn a profit
that is 30% of the cost. How much is the company’s markup
on the crude oil? How much is the selling price of the crude
oil?
In the problem, we have
Cost per liter of crude oil: P50
Operating Expenses: 20% of the Cost
Profit: 30% of the Cost
The company may sell the product by adding the
cost and the markup. Thus, the Selling Price may
be computed as follows;
Selling Price = Cost + Markup
= 50 + 25
= P75 per liter
Supposed we want to compute for the rate of
markup, we can either base the rate of the markup
on the cost or on the selling price.

Adding the expenses and profits from a business result in a

markup. So, the markup may be computed as follows;

Markup = Expenses + Profits

= (0.20)(50) + (0.30)(50)
= P25
MARK UP PERCENTAGE EXAMPLE 2:
The cost of a new pair of shoes is P4,6OO. The
- Markup is usually expressed as a percent. It selling price is P8,200. what is the rate of markup
can be expressed as: based on cost?

Based on Selling Price: Since, SP = C + MU , then,

MU = SP – C
M A 0K 3 . pM 3 )
M 3% = MU = 8,200 – 4,600
SEL L IN % . 0IC E pS. )
MU = P3,600

Based on Cost Price: To compute for the Markup Rate Based on Cost,
M3
M A 0K 3 . pM 3 ) M 3% =
M 3% = C
C O ST pC )
3600
M3% =
4600
M 3 % = 0.7826 = 78.26%
MARKDOWN
- This refers to a reduction in the original
selling price.

- It is the difference between the original

selling price and the new selling price.
REASONS FOR
MARK DOWN:
o To face stiff competition

o To encourage bulk purchases

o To dispose off old, damaged or obsolete

stocks

o To close a line of merchandise

Example 3:
Find the markdown rate if the electric fan was To compute for the Markdown Rate:
originally priced at P990.00 and it was sold at
P790.00. MD
MD % =
Markdown (MD) = Original Selling Price (OSP) NSP
– New Selling Price (NSP)
200
Markdown (MD) = P990.00 – P790.00 MD % =
790
Markdown (MD) = P200.00
M D % = 0.2532 = 25.32%
THANK
YOU!
Problem Solving
1. Gaisano sells water dispenser at a markup of 10% of the
selling price. The store’s markup on a certain model is
P200.00
a. What is the cost of buying the water
dispenser?
b. What is the selling price of the water
dispenser?
c. What is the rate of markup based on the
cost?

Rubric
Accuracy = 10 points
Cooperation and Teamwork = 10 points
Total = 20 points