MARK-UPS AND SELLING PRICE A Student’s Guide to basic financial mathematics and when to use it.
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Transcript of MARK-UPS AND SELLING PRICE A Student’s Guide to basic financial mathematics and when to use it.
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!
SKILLS CHECK
What percentage is a whole? Percentages are out of one hundred, so a whole is 100/100 or 100%. Confused? Click here!
UP FOR A CHALLENGE?
Test your ability
to convert
fractions to
decimals to
percentages by
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. 0.67 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 PROFITI buy lollipops that cost me $1 each. I am selling them to other people for $1.30Have 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-UPA shop buys a dress to resell. It costs the shop $44.50. The shop
decides to resell the dress for $72.30. What mark up has the shop
made?Buying price = $44.50
Selling price = $72.30
1)Write formula: Mark-up = Selling Price – Buying Price
2)Substitute values into formula: Profit = $72.30 - $44.50
3)Calculate answer: Profit = $27.80
4)Write your answer in a sentence: The shop has marked up
the dress by $27.80.
CALCULATING MARK-UPSA 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 = $4.76 - $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 $10 500.
The car dealer decides to sell the car for $14 350. What is
the mark-up?
**Mary buys a television for $1433.45. She sells it for
$1554.24. What mark-up has she made?
***Kate buys a CD for $12.50. If she wants to mark-up the
CD by $3.40, how much should she sell the CD for?
P E RC E N TAG E S I N F I N A N C I A L M AT H E M AT I C S
Have you ever gone to a shop and seen a % sign?
PERCENTAGES IN F INANC IAL MATHEMAT ICS
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 $113.50 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 $147.55.
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: $12.33 +
$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!