Selling Price

In order to make money by selling a product, you need to sell it for more than it costs.

How do you determine how much to charge for a product?

Lesson Objective

Calculate the selling price of an item based on cost and markup rate based on selling price.

VJ’s Sporting Goods Store aims for a markup that is 40 percent of the selling price of its merchandise.

The store received a shipment of running shoes at a cost of $38.99 per pair.

What is the minimum selling price the store should charge?

Example 1Example 1

Sales for Month: $42,000 Percent of Total Sales

Cost of goods sold $25,200 60%

Overhead expenses $ 8,400 20%

Profit $ 8,400 20%

TOTAL $42,000 100%

(Note: Markup plus cost equals selling price. If the markup is 40 percent of the selling price, then the cost must be 60 percent of the selling price. Sixty percent is the complement of 40 percent.)

Example 1 (cont.)Example 1 (cont.)

Find the complement of the markup rate.

100% – 40% = 60%

Example 1 Answer: Example 1 Answer: Step 1Step 1

Find the selling price.

Cost ÷ Complement of Markup Rate

$38.99 ÷ 60% = $64.98

Example 1 Answer: Example 1 Answer: Step 2Step 2

Circuit Town purchased some digital cordless phones for $31.99.

Its markup policy is 20 percent based on the selling price.

What is the selling price of the phones?

Example 2Example 2

Find the complement of the markup rate.

100% – 20% = 80%

Example 2 Answer: Example 2 Answer: Step 1Step 1

Find the selling price.

Cost ÷ Complement of the Markup Rate

$31.99 ÷ 80% = $39.99

Example 2 Answer: Example 2 Answer: Step 2Step 2

Find the selling price.

Cost: $19.99

Markup: 25 percent of selling price

Practice 1Practice 1

$26.65

Practice 1 AnswerPractice 1 Answer

Hillard Jewelers marks up necklaces 65 percent of the selling price.

The cost of one necklace is $89.50.

What is the selling price?

Practice 2Practice 2

$255.71

Practice 2 AnswerPractice 2 Answer