1. Chapter 27 pricing math Section 27.1 Calculating Prices Section 27.2
Calculating Discounts

2. CONNECT Why is setting a price an important part of the marketing mix?
Calculating Prices
Section 27.1
CONNECT Why is setting a price an important part of the marketing mix?

3. Calculating Prices
Section 27.1
Explain how a company’s profit is related to markup.
Use the basic formula for calculating a retail price.
Calculate dollar and percentage markup based on cost or retail.
Calculate markdowns in dollars and percentages.
Calculate maintained markup in dollars and percentages.

4. Calculating Prices
Section 27.1
Pricing and profit have a direct relationship to each other. Retailers use different pricing formulas for calculating prices, markups, and markdowns.

5. Calculating Prices
Section 27.1
gross profit
maintained markup

6. Calculating Prices
Section 27.1
Identify the Formula for Calculating a Retail Price in the Middle Circle. Use Outer Circles to Note Other Formulas

7. The markup (margin) on an item is the same as gross profit.
Calculating Prices
Section 27.1
Profit and Markup
The markup (margin) on an item is the same as gross profit.
gross profit
The difference between sales revenue and the cost of goods sold.

8. Calculating Prices
Section 27.1
Profit and Markup
Goals of Pricing

9. Calculating Prices
Section 27.1
Profit and Markup
Goals of Pricing

10. Three Basic Ways to Perform Markup
Calculating Prices
Section 27.1
Profit and Markup
Three Basic Ways to Perform Markup

11. Three Basic Ways to Perform Markup
Calculating Prices
Section 27.1
Profit and Markup
Three Basic Ways to Perform Markup

12. Calculate Percentage Markup on Retail
Calculating Prices
Section 27.1
Profit and Markup
Calculate Percentage Markup on Retail

13. Calculate Percentage Markup on Retail
Calculating Prices
Section 27.1
Profit and Markup
Calculate Percentage Markup on Retail

14. Calculate Percentage Markup on Cost
Calculating Prices
Section 27.1
Profit and Markup
Calculate Percentage Markup on Cost

15. Calculate Percentage Markup on Cost
Calculating Prices
Section 27.1
Profit and Markup
Calculate Percentage Markup on Cost

16. The Cost Method of Pricing
Calculating Prices
Section 27.1
Profit and Markup
The Cost Method of Pricing

17. The Cost Method of Pricing
Calculating Prices
Section 27.1
Profit and Markup
The Cost Method of Pricing

18. Calculating Prices Profit and Markup
Section 27.1
Profit and Markup
Convert the Markup on Retail to the Markup on Cost and Apply it to the Cost of an Item

19. Calculating Prices
Section 27.1
Section 27.1 1.
Discuss why retailers prefer to use markup percent based on the retail price instead of the markup percent on cost.
Retailers prefer markup percent based on retail price because the markup on retail price sounds like a smaller amount and makes the price seem more reasonable to the consumer. Future markdowns and discounts are calculated on a retail basis. Profits are generally calculated on sales revenue.

20. Calculating Prices
Section 27.1
Section 27.1 2.
Identify when the markup equivalents chart is used to calculate retail prices.
The markup equivalents chart is used to calculate retail prices when you know the cost and you know the percent of markup you want based on retail price.

21. Calculating Discounts
Section 27.2
CONNECT What was the last discounted item you purchased?

22. Calculating Discounts
Section 27.2
Utilize a general procedure for figuring discounts and net prices.
Calculate discounts in dollars and percentages.
Calculate net amount.

23. Calculating Discounts
Section 27.2
Discounts affect the final price a customer will pay. It is essential to learn how to calculate discounts and the net price payable.

24. Calculations for Lowering Prices
Calculating Prices
Section 27.1
Calculations for Lowering Prices
Lowering Prices

25. Calculating Discounts
Section 27.2
Procedures for Calculating Discounts, the Net Amount Payable, and Examples of Discounts Offered by Employers and Vendors

26. Calculating Discounts
Section 27.2
Procedures for Calculating Discounts, the Net Amount Payable, and Examples of Discounts Offered by Employers and Vendors

27. Calculating Discounts
Section 27.2
Discounts
How to Calculate a Discount in Dollars Along with an Item’s Net Price

28. Calculating Discounts
Section 27.2
Discounts
How to Calculate a Discount in Dollars Along with an Item’s Net Price

29. Calculating Discounts
Section 27.2
Discounts
Employee discounts can range from 10 percent to 30 percent for entry-level employees.
employee discount
A discount offered to workers by their employers.

30. Calculating Discounts
Section 27.2
Discounts
Types of Discounts

31. Calculating Discounts
Section 27.2
Discounts
Types of Discounts

32. Calculating Discounts
Section 27.2
Discounts
How to Calculate a Trade Discount Based on a Series

33. Calculating Discounts
Section 27.2
Discounts
How to Calculate a Trade Discount Based on a Series

34. Calculating Discounts
Section 27.2
Discounts
Quantity Discounts
No. of items 1–24 25–48 49–72
Unit Price $0.95 $0.90 $0.85

35. Calculating Discounts
Section 27.2
Discounts
Promotional Discounts
$250 ÷ $10,000 = .025
.025 = 2.5%

36. Calculating Discounts
Section 27.2
Discounts
Potential Pitfalls of Discount Pricing
Frequent sales can numb customer response.
Some businesses have to offer very deep discounts to see an increase in traffic.
Price promotions may set a precedent.
Poorly planned discounts can lead to price wars.

37. Calculating Discounts
Section 27.2
Section 27.2 1.
Explain why employers offer employee discounts.
Offering discounts encourages employees to buy and use the products in the hope that they will then project confidence in the products and enthusiasm when selling those products.

38. Calculating Discounts
Section 27.2
Section 27.2 2.
Identify what the number “3” represents in invoice terms 3/10, net 45.
The number “3” indicates that the buyer will receive a 3 percent discount if the invoice is paid within 10 days.

39. Calculating Discounts
Section 27.2
Section 27.2 3.
Discuss why vendors offer seasonal discounts.
Vendors offer seasonal discounts to encourage buyers to purchase goods long before the consumer buying season.

40. Chapter 27 pricing math Section 27.1 Calculating Prices Section 27.2
End of
Chapter 27
pricing math
Section 27.1
Calculating Prices
Section 27.2
Calculating Discounts