Encyclopedia > Markup (business)

  Article Content

Markup (business)

Markup is a term used in marketing to indicate how much the price of a product is above the cost of producing and distributing the product. It can be expressed as an fixed amount or as a percentage. There are numerous variations of each.

As a Fixed Amount assume:
retail list price = $1.99 and the product cost is $1.40
MARKUP = price - cost
                  1.99 - 1.40 = .59

assume the actual selling price was $1.60
MARKDOWN = List price - selling price
                          1.99 - 1.60 = .39

INITIAL MARKUP = list price - cost
                                 1.99 - 1.40 = .59

MAINTAINED MARKUP = sale price - cost
                                         1.60 -1.40 = .20 As a Percentage INITIAL MARKUP % = initial markup / sale price
                                    .59 / 1.99 = 29%

MAINTAINED MARKUP % = maintained markup / sale price
                                              .20 / 1.60 = 13%

MARKUP % ON COST = markup / cost
                                        .59 / 1.40 = 42%

MARKUP % ON PRICE = markup / price
                                          .59 / 1.99 = 29%

To convert from markup on price to markup on cost:
MARKUP ON COST = markup % on price / 1 - markup % on price
                                    .29 / (1 - .29) = 42%

To convert from markup on cost to markup on price:
MARKUP ON PRICE = markup % on cost / 1 + markup % on cost
                                    .42 / (1 + .42 ) = .29

PRICE = cost / 1 - markup % on price
              1.40 / (1 - .29) = 1.99

COST = price / 1 + markup % on cost
              1.99 / (1 + .42) = 1.40

PRICE = markup / markup % on price
              .59 / .29 = 1.99

See also : marketing, pricing, cost-plus pricing, production, costs, and pricing

List of Marketing TopicsList of Management Topics
List of Economics TopicsList of Accounting Topics
List of Finance TopicsList of Economists



All Wikipedia text is available under the terms of the GNU Free Documentation License

 
  Search Encyclopedia

Search over one million articles, find something about almost anything!
 
 
  
  Featured Article
BBC News 24

... 1999, with the advent of digital television in the UK, satellite viewers were able to view the service. The BBC were initially criticized for the cost of running BBC ...

 
 
 
This page was created in 22.4 ms