Markup

In order to make a profit, each company must sell its products for more than they cost. The difference between cost and selling price is referred to as markup.

Example 1

A washing machine selling for $500 costs the seller $350. The markup is $150

Percent Markup
Markup is generally expressed in terms of a percentage:

Percent = percentage
                   base

where      percent = markup percent
          percentage = markup
                   base = selling price or cost

Selling Price as a basis :  Computing percent markup

Example 2

A shoes selling for $20 cost the seller $15. What is the percent markup based on selling price?

percent  =$5  ($20-$15)
               $20

Percent markup = .25

Computing Cost
In order to use the percent markup to compute either the cost or the selling price, the selling price formula must be reexamined in terms of percents. It should be noted that the base is 100 percent.

Example 3

A shoes selling for $20 has a markup percent of 25 percent .What is the cost?

  25% = X
             20

X      = 25% X $20
         = $5 (markup)
Cost  =  $20 - $5 = $15

Computing Selling Price

Example 4

A shoes has a markup percent of $5, which 25 percent of the selling price. What is the selling price?


25%    = $5
              X
25%X = $5
       X = $5
              .25
      X = $20