1. BASIC RETAIL MATH
Mark-Ups & Mark-Downs

2. MARK-UP
The “retail method of accounting” uses the retail price as the base, or 100%
Mark-up $’s are the difference between merchandise cost and selling price
Mark-up % is found by dividing markup $’s by the retail price
Retail Price (selling price) is what the end customer pays for the merchandise.
Cost is ALWAYS what the store paid to the vendor, not the selling price or retail price.

3. Example of Mark-Up Retail Price $80 Cost $40 Mark-Up $’s $40
This is known as “keystone” mark-up. The retail price is DOUBLE the cost of the item.

4. CALCULATING MARK-UP Cost $’s + Mark-up $’s = Retail Price
Mark-up $’s / Retail Price = Mark-up %
Retail Price = 100% of the Dollars
Part of the R.P. is the cost paid to the vendor
Part of the R.P. is the mark-up amount added to the cost of the merchandise
Shortcut to calculating Retail Price:
Cost $ of the item / Cost Compliment of the planned Mark-up % = R.P.
Example: An Item costs $25. The mark-up is 60% What is the Retail Price?

5. Mark-up Example Continued:
Cost Compliment of Markup % =
100% - 60% = 40%
Item cost is $25
$25/ .40 = $62.50
Retail price should be $62.50 on an item that costs $25 if the plan mark-up % is 60%.

6. Mark-Downs
Mark-downs result when the initial selling price is reduced. Reasons for markdowns:
End of season
Over stocked
Sales Promotion
Shop worn or damaged
Allowance for a customer
Slow sellers

7. Calculating the Markdown Price
Original Price: $90
Markdown %: 25%
Compliment of 25% = 75%
$90 x .75 = $67.50
$67.50 is the markdown price for the item at 25% off the original price

8. What are the markdown prices of these items?
Original Price $98
Markdown % 30%
Markdown Price $________
Original Price $495
Markdown % 25%
Markdown Price $_________

9. Finding the cost based on retail price & planned mark-up %
Cost Compliment: 45%
$75 x .45 = $33.75
$33.75 is the highest cost that the retailer can pay in order to sell the item at $75 with a markup of 55%.
With this information, the retailer knows the highest cost he/she can pay for the item when negotiating with the vendor/supplier (wholesaler)

10. Markdown Rate Markdown Rate = Markdown % of Sales
Markdown rate is an important factor in evaluating the performance of an item, category, or department, division or entire retail organization
Markdown rates are an indication of how the profitability of a business may be affected negatively.
Markdowns indicate how much business was done at reduced prices; therefore, the higher the markdown rate, the lower the gross margin may be.

11. QUESTIONS?
Using Retail Math Formula Sheet and a calculator, complete the Discount/ Markup worksheet!

12. WARM-UP
Using your formula sheet/handout and a calculator, answer the following:
A) Item cost is $30. Plan MU% is 70%. Retail Price is $_______.
B) Item cost is $ Plan MU% is 45%. Retail Price is $_______.
C) Item Retail Price is $150. MU% is 52%. Cost is $________.
D) Item Retail Price is $15. MU% is 60%. Retail Price is $________.

13. SCAVENGER HUNT OBJECTIVE:
1st group to correctly calculate and locate the specified merchandise wins!
There are 5 SPECIFIC ITEMS you have to find online…READY?

14. MERCHANDISE #1 Retailer: Macy’s
Item: Marvin Richards Pillow-Collar Coat
Find the Markdown Rate (%)

15. MERCHANDISE #2 Retailer: Dillards
Item: Dooney & Bourke "Croco" Small Stretch Slouch Bag
We are going to pretend that the Dillard’s cost was $147.50
What is the Markup %?

16. MERCHANDISE #3 Retailer: Macy’s
Item: Kenneth Cole Reaction Long Sleeve Stripe Woven Shirt
What is the Markdown Rate (%)?

17. MERCHANDISE #4 Retailer: RevolveClothing.com
Item: Love Juicy Opera Mittens in Black
If RevolveClothing.com paid $21.00 for the item (their “cost”), what is the Markup % ?

18. MERCHANDISE #5 Retailer: J.Crew Item: Cashmere Argyle Cardigan
If this is a keystone markup, what is the cost?