1. Making Sense of Markups
Beginning of Lesson of Mark ups. Think in a business owner mindset. How do business owners make a profit?
Everything cost money! In a business, an owner want to be sure to make a profit to a successful business.

2. Pricing Products Does a retailer make the products it sells?
Not Usually –buy from wholesalers/producers
Does a Retailer buy a shirt for $15 and sell it to customers for $15?
Why or Why not?
If a retailer does not sell its products for more than what it cost them, what would happen?
Begin a discussion with students about business mind markups.
Can you name any products that you believe businesses markup to rip you off?
The next 5 slides talk about America’s biggest rip offs according to a CNN report.

3. Rounding in Marketing Round money to the nearest 100th$
$435.35
Round Percentages to nearest tenth
97.567%
97.6%

4. Pricing Products
To make a profit, what must a business do with the products they buy to sell?
Mark them up

5. What is Mark-up
Cost: the initial price paid by retailers/manufacturers for the products they sell
Includes shipping costs
Markup: adding a dollar amount (markup), as a percentage or a dollar amount, to the cost of the products purchased to sell to customers
Used by retailers and wholesalers primarily
Retail Price: The total price charged for a product sold to a customer, which includes the manufacturer's cost plus a retail markup.

6. Convert % to a Decimal Answer 8.5% = 0.085 Example: convert 180%
Process: Drop the % symbol and move the decimal point 2 places to the left
Example: Convert 75% to a decimal:
Example: Convert 8.5% to decimal
Answer 8.5% = 0.085
Example: convert 180%
Answer 180% = 1.80

7. How to Markup
Most difficult thing to determine in business is how to price your product
Should every product a business sells be “marked-up” the same percentage?”
No, every item is different and is based on:
Customer Demand for a product
What competitors are pricing their products for

8. Calculating Markup Amount
Formula: Markup = Retail Price – Cost
Difference between retail price and cost
The markup may also be called the gross profit or profit margin

9. Example
Discount Electronics purchased HDTVs for $ each and sells them for $899.99
What is the markup amount on each TV?
Markup = Retail Price – Cost
Mark up = – =
410.43
Markup = Retail Price – Cost
Mark up = –
Markup =

10. Calculate Retail Price w/Markup Rate
First calculate the markup amount
Then add the markup amount to the cost to equal your Retail Price
Two Step Formula:
Markup = Cost * Markup Rate
Retail Price = Cost + Markup

11. Example
Wholesale Jewelers, Inc. sells digital watches to jewelry stores for $ each. The suggested retail price is to add a mark-up rate of 160% of cost. What is the suggested retail price?
Markup = * =
Retail Price = =
29.52
Read problem. Allow students time to calculate the answer. If you wish you can show your work on the board. The slide will display the answer.
Markup = Cost * Markup Rate
Markup = * 1.6
Markup = 29.52
Retail Price = Cost + Markup
Retail Price =
Retail Price = $47.97
47.97
Formula:
Markup = Cost * Markup Rate
Retail Price = Cost + Markup

12. Let’s Practice What is 170% of $125 cost 104% of $4329 cost is what?
Markup
Retail Price:
104% of $4329 cost is what?
Markup:
What is 170% of 125
Markup
Retail Price: 125 * 1.70 = $212.50
104% of 4329 is what?
4329 * 1.04 =
What % of 225 is 500?
X * 225 = 500
X = 2.22 = 222%
125% of what number is 325?
1.25 * x = 325
X = 260

13. Calculate Additional Quantity
You want to purchase more product than last year.
Formula:
Additional Quantity = Original order * converted %
Total Order = Additional Quantity + Original order
Example:
You bought 95 hats last year and want to increase your order by 50% more this year.
95 X .50 = 47.50
= round up/down
How many are you buying?
143 items
What is 170% of 125
Markup
Retail Price: 125 * 1.70 = $212.50
104% of 4329 is what?
4329 * 1.04 =
What % of 225 is 500?
X * 225 = 500
X = 2.22 = 222%
125% of what number is 325?
1.25 * x = 325
X = 260

14. Example
If our school store purchased 144 mittens last year, and this year we would like to purchase 30% more than last year. How many mittens do we need to order this year?
144 * .30 = 43.2
= 187 mittens

15. Markup as a Rate (Percentage)
The markup rate is the markup expressed as a percent
Businesses usually express the markup in one of two ways:
As a percent of the Retail price
As a percent of Cost

16. Markup as a Percent of Retail Price
Businesses usually express the markup as a percent of the retail price (selling price)
Formula: Markup rate = Markup / Retail Price
Example: Luggage costs $54 and you want to sell it for $90, what is the markup rate based on retail price?
Markup Amount = Retail Price – Cost
$90-$54 = $36 markup
Markup rate = Markup / Retail Price
36/90 = .40 or 40% markup Rate

17. Markup as a Percent of Retail Price
A Florist buys roses for $10.99 a dozen and sells them for $24.95 a dozen. What is the markup rate based on the retail or selling price?
Markup = Retail Price – Cost
Markup Amount = =
Markup rate = Markup / Retail Price
Markup rate = 13.96/24.95
Markup rate = .5596
Markup rate = 56%
Click 1 will display the example. Clicks 2 and 3 will display the formulas. Clicks 5 and 6 will display the answers.
Markup = Retail Price – Cost
Markup =
Markup = 13.96
Markup rate = Markup / Retail Price
Markup rate = 13.96/24.95
Markup rate = .5596
Markup rate = 56%

18. Markup as a Percent of Retail Price
Our school store purchases a printed Under Armour hooded sweatshirt from Gear for Sports for $ We sell the hooded sweatshirt for $ What is the markup rate based on retail price?
Markup rate = Markup / Retail Price
$60.00 – $37.50 = $22.50 markup
$22.50 / $60.00 = .375 = 37.5%
Again read example on Powerpoint. Give time for students to calculate answers before the correct answer is given.

19. Markup as a Percent of Cost
Many businesses use the cost to figure the markup rate
Formula: Markup rate = Markup / Cost
Example: Rain suit cost $120 and you want to sell it for $162. What is the markup based on cost?
First calculate markup: $162- $120 = 42
Next calculate markup rate: 42/120 = 35%

20. Practice
Gear for Sports sells under armour t-shirts to the school store for $13.50 each. They have a suggested retail price computed by marking up the cost by 60%. What is the suggested retail price?
Markup = Cost * Markup Rate
13.50 * .60 = 8.10
Selling Price = Cost + Markup
Selling Price = = $21.60
Read Problem. Allow students time to calculate their answer. Click two more times to show the formulas they use. Then the next two click will show the answers.
Markup = Cost * Markup Rate
13.50 * .60 = 8.10
Selling Price = Cost + Markup
Selling Price = = $21.60

21. Post Test