A retailer purchases items that cost Rs. 40.5 each. He adds a markup of 25% on the selling price. The item is then marked down to 7%. What will be the final selling price of the item.
By definition, the markup percentage calculation is cost X markup percentage. Then add that to the original unit cost to arrive at the sales price. The markup equation or markup formula is given below in several different formats. For example, if a product costs $100, then the selling price with a 25% markup would be $125.
Gross Profit = Sales Price – Unit Cost = $125 – $100 = $25
Now that you have found the gross profit, let’s look at the markup percentage calculation:
Markup Percentage = Gross Profit/Unit Cost = $25/$100 = 25%
The purpose of markup percentage is to find the ideal sales price for your products and/or services. Use the following formula to calculate sales price:
Sales Price = Cost X Markup Percentage + Cost = $100 X 25% + $100 = $125