Cost As A Basis

When cost is used as a base for markup, it is sometimes referred to as a markon. It has the advantage of expressing clearly the fact that the price increase is added directly to its basis (cost).

Computing Percent Markup

Percent markup = $ markup
                                cost

Example 1 

A printer that sells for $115 cost $95. What is the percent markup based on cost?

Percent markup = $20 ($115-$95)
                             $95
Markup             = 21.05%

Example 2  (Computing the cost)

If an item selling for $75 has a 20 percent markup on cost, what is the cost

Selling price = cost + markup
 $75            = 100% + 20%
 $75            = 120%
 $75/1.20    = cost
$62.5          = cost

Computing Selling Price

In order to compute the selling price from either the cost or the markup, you once again must look at the formula for selling price from the point of view of percents. The cost (basis) is 100 percent.

Example 3

If a tie that costs $50 has a markup of 30 percent on cost, what is the selling price?

Selling price = cost + $ markup
                   = $50 + (0.30) ($50)
                   = $50 + 15
                   = $65