MARKDOWN DISCOUNTS Coupon: a voucher entitling the holder to a discount off a particular product.

How many of you have actually used a coupon? How many of you would cut coupons out? Can these discounts add up to anything? If an item is 20% off, how would you figure this? If a clearance item is already 50% off and you get an additional 20% off, is that 70% off?

Why Do Companies Develop them? To get consumers’ attention steer consumers toward your product instead of a competitor's Advertise a New Product Buy Customer Loyalty How do you feel when you get a coupon from your favorite store To Get repeat Business To advertise you have a markdown!

Formula: Discount Amount = Reg. Price * discount rate Net Price = Reg. price – Discount amount If 34% discount off $40, what is the discount amount? Discount amount = X = Net Price = - = $40 x.34 = $13.60 $40 – = $26.40

You get a coupon in the mail for 25% off of a pair of jeans. The jeans you want are $85. What would your final cost (net price) for the Jeans be? Discount amount = X = Net Price = - =

Short Formula: Reg. price X percentage you have to pay Net Price = Reg. Price * (1-discount rate) If you get a 35% discount off a $600 TV, what is the net price paid? Net Price = X (1-discount rate)= Net price = $600 x (1-.35) = $390 $600 x.65 = $390 paid

You get a coupon in the mail for 25% off of your entire purchase. You buy $ What would your final net price be? Net Price = X (1 - ) =

A markdown is the term used by the business or marketing personnel to reduce the price of a product to increase the sales volume A discount term used by a business or marketing personnel to express in a percentage markdown to the consumer to show the sale

Why do businesses mark items down? Sales of that item are slow Seasonal Item Item that will be discontinued Going out of business Introduction of an item

1.Temporary Markdown –Reduction in price for a specified period of time - will raise back to the normal price after the sale expires –Most familiar pricing method used to generate sales 2.Permanent Markdown –used to remove old products that: are perishable and close to being out of date (e.g., donuts); –Remove older model to make room for new models –products that the marketer no longer wishes to sell

3.Seasonal –see price reductions at the end of prime selling season –Products primarily sold during a particular time of year –Ex: clothing, gardening products, sporting goods and holiday-items

Retail Price: Original selling price of the product Dollar Markdown: amount off of the retail price Sales Price (Net Price): final price you pay Markdown Steps Include

Formula: Dollar Markdown = Retail Price x % Markdown Sales Price = Retail Price – Dollar Markdown

Our school store sells an MHS Sweatshirt that retails for $60.00 and you want to markdown the product by 25% to increase sales. What is the amount of the mark down? Dollar Markdown = x = $60 X.25 = $15.00 Markdown What is the Sale Price? Sales Price = - = Net Sales Price = $45 net price

LET’S PRACTICE What is 25% of 100? Dollar Markdown = x = Sale Price = - = What is 15% of 50? Dollar Markdown = x = Sale Price = - = What is 50% of 75? Dollar Markdown = x = Sale Price = - = What is 30% of 60? Dollar Markdown = x = Sale Price = - =

Net Price : The price you actually pay for the item (after discount) List Price: The price the business pays, often expressed in a catalog (catalog price) More Terms….

Short Formula: Net Price = Retail Price x (1 – markdown %) For Business Discount: Net Price = List Price x (1-markdown%) Alternative Method

You have a new item of clothing with a 40% discount for April 3 – April 6 that sells for $75.00, what is the net price? –Net Price = X (1- ) = Alternative Method

Retail price: $380 for a last years TV Model with a discount Rate: 30% Find the net price you pay: Net Price = X (1- ) = Example

The winter season is about halfway complete and we have a large quantity of MHS mittens. We need to increase the sales of the mittens. What would the sale price of the mittens be if the retail price is $15 and a markdown of 25%. Net Price = X (1- ) =

The Sports Shop purchases running shoes from wholesalers for a list price of $ Sports Shop receives a discount of 20%. What is the net price? Net Price = Put it All Together

A sports stadium sold a total of 15,125 tickets and 25% of those tickets were children. How many tickets were sold to children? »Remember to round to a whole number! Total = –15,125 x.25 = 3782 tickets Figure this…

Please show me that you understand the concepts to this point. WORKSHEET