MARK-UPS AND SELLING PRICE A Student’s Guide to basic financial mathematics and when to use it

THINK ABOUT THIS:  How do shops make money?  Have you ever bought something with the intention of selling it later for a higher price?

SKILLS CHECK What is a percent? “Percent” means “for (each) hundred”. “Per” is derived from Latin and means “for”. “Cent” (also Latin) means hundred. Mathematically a percent is one hundredth, one out of one hundred or 1/100. Still not sure? Click here!Click here!

SKILLS CHECK What percentage is a whole? Percentages are out of one hundred, so a whole is 100/100 or 100%. Confused? Click here!Click here!

UP FOR A CHALLENGE? Test your ability to convert fractions to decimals to percentages by clicking here!clicking here!

REMEMBER  Fraction to decimal: Divide the top number (the numerator) by the bottom number (the denominator)  E.g. 6/9 = 6 divided by 9 = 0.67  Decimal to percent: Multiply your decimal by 100  E.g x 100 = 67%  Percent to fraction: Get rid of the % sign and write the number over one hundred (i.e. Make your number the numerator and 100 your denominator). Simplify if possible.  E.g. 67/100 = (approriximatly) 2/3

FINANCIAL VOCABULARY  Percent – Parts per hundred  Profit – Financial gain. Specifically it is the difference between the amount the earned and the amount spent on buying/producing.  Loss –  Selling Price –  Buying Price  Discount –  Mark-up –

MARK-UPS AND PROFIT I buy lollipops that cost me $1 each. I am selling them to other people for $1.30 Have I changed the price? How much have I changed the price by? Am I making a profit? How much is my profit?

LOLLIPOP REVIEW  I bought the lollipops for $___. Therefore, my buying price was $__ Buying price is how much the (re)seller paid.  I sold the lollipops for $____. Therefore my selling price was $___. Selling price is how much the seller sells a product for.  I added $____ to the buying price. Therefore, the mark-up was $___. A mark-up is how much a product’s price is increased by the seller. A mark-up may be equal to profit.

MARK-UPS Shops mark-up (increase) the price of the products that they buy from wholesalers so that they can make money (a profit). This means they sell things for more than they pay for them. A mark-up is how much the shops increase the price of a product or the difference between the buying price and the selling price. It can be calculated using this formula: Mark-up = Selling price – Buying Price

CALCULATING A MARK-UP A shop buys a dress to resell. It costs the shop $ The shop decides to resell the dress for $ What mark up has the shop made? Buying price = $44.50 Selling price = $ )Write formula: Mark-up = Selling Price – Buying Price 2)Substitute values into formula: Profit = $ $ )Calculate answer: Profit = $ )Write your answer in a sentence: The shop has marked up the dress by $27.80.

CALCULATING MARK-UPS A grocery store buys apples at $2.01 per kilogram and decides to resell them for $4.67 per kilogram. What is the mark up on each kilogram?

APPLE ANSWER Mark up = selling price – buying price Mark up = $ $2.01 Mark up = $2.75

CALCULATING MARK-UPS *Billy buys a chocolate bar for $1.20 and decides to resell it for $2.40. What is the mark-up? **A car dealer buys a car off a manufacturer for $ The car dealer decides to sell the car for $ What is the mark-up? **Mary buys a television for $ She sells it for $ What mark-up has she made? ***Kate buys a CD for $ If she wants to mark-up the CD by $3.40, how much should she sell the CD for?

PERCENTAGES IN FINANCIAL MATHEMATICS  Have you ever gone to a shop and seen a % sign?

PERCENTAGES IN FINANCIAL MATHEMATICS  Percentages are often used in financial mathematics.  We can explain mark ups using percentages!

MEET BETH! Meet Beth. She owns and manages a clothing boutique. Every week she receives new stock for her store, such as dresses, t-shirts, suits and shoes.

BETH’S DILEMMA The thing is, Beth buys all these clothing and accessories for different prices. One day she receives an order of t-shirts, which cost $12.33 per t-shirt, and an order of party dresses, which cost $ per dress.

$113.50

BETH’S DILEMMA Beth decides that it would be reasonable to mark up the price of the dress by $34.05 – so that it will be resold at $ However, she cannot justify marking up the price of the t-shirt by the same amount.

WHAT TO DO? How can Beth be fair and consistent with her mark-ups?

BETH’S MARK- UP IDEA! Beth does some research and realises that if she marks each product by a certain percentage she can be consistent!

MARK-UPS AS A %  Often retailers decide to mark-up products based on their buying price  They may use a percentage of the buying price to figure out a fair selling price

HOW IS THIS DONE? Let’s say Beth decides to mark up the t-shirt by 30% First, we find what 30% of the t-shirts buying price is: $12.33 x (30/100) = $3.70 [The mark up is $3.70] Then we add that amount to the buying price: $ $3.70 = $16.03 Therefore, the selling price of the t-shirt will be $16.03.

QUESTIONS! *The buying price of a piano was $750. The mark up is 50%. How much is the mark-up in dollar value? **Craig bought a pair of shoes for $25. He wants to mark up the shoes by 25%. How much will he sell them for? ***Ronald buys apples at $3.25 per kilogram. He wants to mark up the price by 36.5%. What is the dollar value of the mark up per kilogram? How much will each kilogram sell for?

EXTEND! The following link will take you to a quiz where you can test your knowledge of discounts (coming soon!) and mark-ups! Mark-ups and Discounts – click here!