Scribd
Upload
368 views

Markup and Markdown: Mr. Christian Rae D. Bernales, LPT

The document discusses various pricing strategies used in retail including markup, markdown, and mark-on. It defines these terms and provides formulas to calculate pricing adjustments based on cost price and target profit margins. Examples are given to demonstrate how to determine new selling prices, percentage adjustments, and gross margins for different products and price changes.

Uploaded by

Alissa May
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
368 views

Markup and Markdown: Mr. Christian Rae D. Bernales, LPT

The document discusses various pricing strategies used in retail including markup, markdown, and mark-on. It defines these terms and provides formulas to calculate pricing adjustments based on cost price and target profit margins. Examples are given to demonstrate how to determine new selling prices, percentage adjustments, and gross margins for different products and price changes.

Uploaded by

Alissa May
Copyright
© © All Rights Reserved
Available Formats
Download as PDF, TXT or read online on Scribd
You are on page 1/ 7

Markup and Markdown

Prepared By:

Mr. Christian Rae D. Bernales, LPT


I. Learning Objectives:
At the end of the lesson the learner should be able to;
1) Differentiate Mark-on, Markdown and Markup.
(ABM_BM11BS-Ig-1)
2) Illustrate how Mark-on, Markdown, and Markup are obtained.
(ABM_BM11BS-Ih-2)
3) Differentiate markup from margins. (ABM_BM11BS-Ih-3)
4) Describe how gross margins is used in sales. (ABM_BM11BS-Ih-4)

II. Development of the Lesson:

is the amount at which the


product is to be sold.

is the total cost involved in selling a


product. This involves purchase price (fixed cost) and all other
expenses (variable cost) that are incurred before a product is sold.

Retrieve from: https://marketbusinessnews.com/financial-glossary/selling-price/


III. Lesson Proper

is the difference between the selling price and the cost price.
It is computed based on the mark-up percentage.

Basic Formula:
Markup amount = Selling Price – Cost Price
Markup amount = Markup percentage × Cost Price

Markup Percentage is the percentage of the cost price that the company
wanted to add to determine the selling price

𝑀𝑎𝑟𝑘𝑢𝑝 𝑎𝑚𝑜𝑢𝑛𝑡
Markup Percentage = 100 × ( )
𝐶𝑜𝑠𝑡 𝑝𝑟𝑖𝑐𝑒

Example:
How much must be the selling price of a monoblock table with a cost price
of Php 525.00 if the desired markup percentage is 28%.

Solution:
C = Php 525.00 MuA = Mu% x C
Mu% = 28% MuA = (0.28) x (525)
SP = ? Markup Amount = Php 147.00

SP = MuA + C
SP = 147 + 525
Selling Price = Php 672.00

1.) How much was the cost price of a bag pack sold for Php 381.90
if the markup percentage is 34%?
is a temporary mark-up on certain products to take
advantage of the high demad during peak sales like the weeks prior to
Christmas, opening of classes, etc. Mark-on is used to temporarily
maximized earnings and the price is usually returned to its original selling
price when the demand for the product is on a normal level.

Basic Formula:
Mark-on amount = New SP – Current Selling Price
Mark-on amount = Mark-on percentage × Current SP

Example:
A fast-selling item in a Department Store is currently being sold for
Php 675.35. Because of high demand for the item, the store decided to
apply a mark-on percentage of 22%. Find the new selling price.

Solution:
Current Selling Price = Php 675.35
Mark-on Percentage = 22%

MoA = Mo% x CSP


MoA = (0.22) x (675.35)
Mark-on Amount = Php 148.58

NSP = MoA + CSP


NSP = 148.58 + 675.35
New Selling Price = Php 823.93

1.) An electronics retailer offers a computer with a current selling


price of Php 1,000. The retailer applies a mark-on percentage of
20%. Find the new selling price?
is defined as a reduction in the selling price of the
merchandise. The cause of a Markdown may be to stimulate the sale of
slow-moving products. Some may use mark-down to drive competitors out
of business.

Basic Formula:
Markdown amount = Current SP – New Selling Price
Markdown amount = Markdown percentage × Current SP

Example:
How much markdown percentage was applied to a jacket whose previous
price of Php 798.00 is now sold for Php 654.36?

Solution:
Current Selling Price = Php 798.00
New Selling Price = Php 654.36

MdA = CSP – NSP


MdA = 798 – 654.36
Markdown Amount = Php 143.64

𝑀𝑑𝐴
Md% =
𝐶𝑆𝑃
143.64
Md% =
798
Markdown Percentage = 0.18 x 100 = 18%

1.) Find the previous selling price of a shirt which now sells at
Php 219.00 which was given a markdown percentage of 27%.
is defined as the difference between the selling price and the
cost price. Gross Margin or Profit Margin is numerically equal to the mark-
up. Gross margin is based on the selling price of the product rather than its
cost price.

The Illustration below shows the computation of the Margin and Markup.

Example:
Compare the markup percentage and gross
margin of a rubber shoes with a cost price
of Php 1,765.00 and a selling price of
Php 2,153.33.

Solution:
Markup Percentage Gross Margin
First find the markup amount. Markup Amount = Php 388.33
MuA = SP – CP Selling Price = 2,153.33
MuA = 2,153.33 – 1,765
Markup Amount = Php 388.33 Find the margin percentage.
Mar% = MuA ÷ SP
Next find the markup percentage. Mar% = (388.33 ÷ 2,153.33) × 100
Mu% = MuA ÷ CP Gross Margin = 18.03%
Mu% = (388.33 ÷ 1,765) × 100
Markup percentage = 22%
Solve the problem involving Gross Margin.
1.) Sally sold a computer for Php 219,540.00. The cost of the item was
Php 147,470. What was the Gross Margin, Markup amount, and the
Markup percentage?

1.)

2.)

3.)

Reference: https://www.youtube.com/watch?v=n6qz7fiyM6w
https://www.youtube.com/watch?v=rD-l7kO4-F4

You might also like