Calculating Mark-up: Understanding % Increase in Price for Retailers

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Discussion Overview

The discussion revolves around calculating the percentage mark-up for a product sold by retailers, specifically examining different methods to arrive at the mark-up percentage based on cost and selling price. The conversation includes theoretical considerations and practical implications of mark-up calculations.

Discussion Character

  • Technical explanation, Mathematical reasoning, Debate/contested

Main Points Raised

  • One participant asks for the percentage mark-up on a product costing \$2.20 and sold for \$3.19.
  • Another participant calculates the mark-up as 45% using the formula $\dfrac{3.19}{2.20} = 1.45$.
  • A third participant reiterates the initial question and congratulates the previous contributor on their calculation.
  • One participant presents an alternative method, calculating the mark-up as \$0.99 and deriving the percentage as 45% based on the cost price.
  • A different perspective is introduced, noting that there are at least two kinds of mark-up: one based on the wholesale price (45%) and another based on the retail price (31.03%).
  • This participant also mentions that different businesses may adopt various methods for calculating mark-up, including adjustments based on specific business strategies.

Areas of Agreement / Disagreement

Participants present multiple methods for calculating mark-up, leading to different interpretations and results. There is no consensus on a single method, as various approaches are discussed.

Contextual Notes

Participants highlight the dependence on definitions of mark-up and the context in which it is applied, indicating that the calculations may vary based on business practices.

tkiesling
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If a product costs a retailer \$2.20 and it is sold at \$3.19
what is the % mark-up and how does one arrive at that?
thx
 
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tkiesling said:
If a product costs a retailer \$2.20 and it is sold at \$3.19
what is the % mark-up and how does one arrive at that?
thx

$\dfrac{3.19}{2.20} = 1.45$

45% mark up ...
 
tkiesling said:
If a product costs a retailer \$2.20 and it is sold at \$3.19
what is the % mark-up and how does one arrive at that?
thx
Congratulations MarkFL. Your price is going up!

-Dan
 
Equivalently, and the way I would have done it, since the item was bought for \$2.20 and sold for \$3.19 the actual "mark up" is 3.19- 2.20= \$0.99 so the percentage mark up is \frac{0.99}{2.20}= 0.45 so again a 45% mark up.
 
tkiesling said:
If a product costs a retailer \$2.20 and it is sold at \$3.19
what is the % mark-up and how does one arrive at that?
thx

One must ALWAYS remember that there are at least TWO kinds of "Markup". The method used depends on how you think about your business and how you report costs and profits.

3.19 - 2.20 = 0.99 -- This is the Markup.

0.99 / 3.19 = 31.03% Markup when compared to the Retail Price. The theoretical maximum of this sort of markup is 100%. (Well, it's really a "supremum", not a "maximum", but I digress.)

0.99 / 2.20 = 45.00% Markup when compared to the Wholesale Price. There is no theoretical maximum to this sort of markup.

There are other methods. In particular, some business owner may want the first 5¢ of everything, so you have to shave off a nickle before calculating the "Markup" for the purpose of the business enterprise. Really, it's anything you can think of and calculate consistently.
 

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