Is there an easier way to do this?
- Thread starter dnorr
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Hi dnorr,dnorr said:
What you have there seems like a reasonable approach. That's how I would do it.
On the right side of the equation you are combining x with 0.40x. That would be 1x + 0.40x to get 1.40x.
The reason you do that is this. The selling price ($63) is equal to the cost (x) plus 40% of the cost (x).
The markup is 40% of the cost and must be added to the cost to get the selling price.
I hope I haven't confused you.
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- Apr 12, 2005
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One must remember that there are two common ways to do "Markup"
1) We have demonstrated above: Markup as a percentage of the Cost. There is ni upper bound to this type of markup.
(Cost + 0.40*Cost) = 1.40*Cost = Price = $63.00
Cost = $45.00
$63.00 - $45.00 = $18.00 = Markup of the first kind.
2) Not demonstrated is: Markup as a percentage for the selling price. Some like this better, as it has an upper bound.
$63.00 * 0.40 = $25.20 = Markup of the second kind.
$63.00 - $25.20 = $37.80 = Original Cost
If you are consulting with any business, you must make sure you know which one they like. Maybe both.
1) We have demonstrated above: Markup as a percentage of the Cost. There is ni upper bound to this type of markup.
(Cost + 0.40*Cost) = 1.40*Cost = Price = $63.00
Cost = $45.00
$63.00 - $45.00 = $18.00 = Markup of the first kind.
2) Not demonstrated is: Markup as a percentage for the selling price. Some like this better, as it has an upper bound.
$63.00 * 0.40 = $25.20 = Markup of the second kind.
$63.00 - $25.20 = $37.80 = Original Cost
If you are consulting with any business, you must make sure you know which one they like. Maybe both.