Mathematics of Pricing

Mark Up and Mark Down

Mark Up
Conversion of Mark Up Percent
Mark Down
Profit & Loss
Mark Up
 An important principle in retail business is the proper pricing of its
merchandise
 Wrong pricing may lead to small profit or heavy loss
 The cost price is the original price of the merchandise paid by the retailer.
 The retailer must add an additional amount called the mark Up to its cost
to cover its business and to provide a profit
 The sum of this cost and markup is the retail (or selling ) price
 In other words, markup (or gross profit or gross margins) is the difference
in the retail price and cost price.
Mark up -Formula
• 
R=C+M
Where R = retail price
C = cost price
M = markup or gross profit
Markup is usually expressed as a percent.
 It can be expressed as:
 Mark up percent based on retail price: % = x 100%
 Mark up percent based on cost price: % = x 100%
Example:
• 1.
  the cost price of an antique table is Ᵽ5000. what is the retail price &
markup if the seller wants a 20% markup based on
• a. cost price
• b.Retail price
• Solution
• Based on Cost Price: R = C + M
? = 5000+ ?
120%= 100% +20%
Retail price: % = x 100% markup = 6000-5000
= x 5000 = 1000.00
= 6000.00
Based on retail price
•  R= C + M
? = 5000 + ?
• 100% R = 80%R + 20%R
• Retail price % = x 100%
• = x 5000
= 6250
Markup = 6250 – 5000
= 1250