#15 Profit and Markup

#15 Explain how a company's profit relates to markup.  Using the same product, demonstrate the ability to calculate retail percentage markup and markdown in dollars and percentages.

Profit and Markup

Today we're going to be learning the process of calculating markups and how that impacts profit.  Look at the photo on page 624.  Read the caption.  

1. Why do you think retailers frequently mark down items or put them on sale?
2. What do resellers consider when determining an item's markup?
3. What are the steps in converting 2/3 to a decimal? 

Objectives

• Explain how a company's profit is related to markup.
• Use the basic formula for calculating retail price
• Calculate dollar and percentage markup based on cost or retail
• Calculate markdowns in dollars and percentages

What is profit really?

If you are a businessperson that sells a radio that cost you $100 and you sell it for $150, what is your profit?  You might say your profit is $50.  That is only partially true.  Read page 627 to explain why that is only partially true?

Basic Markup Calculations

Look at page 628.  

Get out a sheet of paper and lets work through this section on pricing math.

Wrapping it Up

1. How is a company's profit related to markup?
2. What is the basic formula for calculating retail price?
3. Why do retailers prefer to use markup percent based on the retail price instead of the markup percent on cost?