Mark-on, Markup, and Markdown

Roselline Joy Supelana Wang CN- 14

Submitted to: Mrs. Catherine Moreno, C.F.E

July 19, 2017
I. Definitions
a) Mark-on
This refers to an increase in price during peak seasons to increase demand. Mark-on
most commonly occurs during Christmas seasons.

b) Markup
This refers to the difference between what a product costs a retailer and what it
sells to a customer. This is an increase in selling price in order to generate profit.

c) Markdown
This refers to a decrease in price in order to increase demand.

II. How to Solve

a) Mark-on
To solve for the mark-on of a good or service, simply subtract the original price
from the new price. The difference of the two is equivalent to the mark-on price.
Converting this into percent, divide the difference by the original price and
multiply by 100%.

New price – original price = increase in price

Increase in price / original price = percent mark-on

Example:
 An airconditioning company sells their A/C for P20,000. As the summer season
approaches, the company sold each unit for P25,000. How much is the mark-on?

P25,000 - P20, 000 = P5, 000

P5,000/ P20,000 = 0.25 = 25%

b) Markup
To solve for markup price, subtract the cost of the product to its selling price. The
difference is the markup price. To solve for the percent markup, divide the markup
price by the cost of the product and multiply by 100%.

Selling price – cost = markup price

Markup price / cost = percent markup

Example:
 A T-shirt costs $10 to produce. In order to make a profit, the owner considered
production time, manufacturing costs, and what it takes to keep her T-shirt store
open. She decided to sell the T-shirts at $30 each. How much is the markup rate?

$30 - $10=$20 (markup price)

$20/ $10 = 2 = 200%

c) Markdown
To solve for the markdown price, subtract the discounted price (new price) from
the original selling price. The difference is the markdown price. To solve for
percent markdown, divide the markdown price by the original selling price and
multiply by 100%.

Original Price - new price = markdown

Markdown / original price = percent markdown

Example:

A broker wishes to sell his XYZ stocks to his clients at $20 per share. He
originally bought the shares at $40 each from the stock market. How much was his
markdown rate?

$40 - $20 = $20

$20 / $40 = 0.5 = 50%

III. Five Questions

I. Mark-on refers to an increase in price due to an increase in ______ ?

II. Markup refers to an increase in price in order to generate ______ ?
III. Markdown refers to the _______ in price in order to increase sales ?
IV. If a pillow costs $5 to produce and sells for $10, how much is the markup rate?
V. During inventory clearance, dresses that are originally sold for P 2000 are now sold for
P 500. What is the markdown rate?
VI. Sources

http://www.investinganswers.com/financial-dictionary/investing/markdown-1816

http://www.mbaskool.com/business-concepts/marketing-and-strategy-terms/13044-
additional-mark-on.html

http://study.com/academy/lesson/markup-markdown-calculation-examples.html

http://www.businessdictionary.com/definition/additional-mark-on.html

https://docs.google.com/presentation/d/1tODp9LPGyIB2w1IQBjD4-
7HHNW60BBrf53EPS90F2g8/edit#slide=id.g23db14c2a2_0_20

http://voyager.dvc.edu/~jnovak/busmath_wk9lecture.htm