mark-ups and selling price a student’s guide to basic financial mathematics and when to use it

MARK-UPS AND SELLING PRICE

A Student’s Guide to basic financial

mathematics and when to use it

THINK ABOUT THIS:

How do shops make money?

Have you ever bought something

with the intention of selling it later

for a higher price?

SKILLS CHECK

What is a

percent?“Percent” means “for (each) hundred”. “Per” is derived from Latin and means “for”. “Cent” (also Latin) means hundred. Mathematically a percent is one hundredth, one out of one hundred or 1/100. Still not sure? Click here!

SKILLS CHECK

What percentage is a whole? Percentages are out of one hundred, so a whole is 100/100 or 100%. Confused? Click here!

UP FOR A CHALLENGE?

Test your ability

to convert

fractions to

decimals to

percentages by

clicking here!

REMEMBER

Fraction to decimal: Divide the top number (the

numerator) by the bottom number (the denominator)

E.g. 6/9 = 6 divided by 9 = 0.67

Decimal to percent: Multiply your decimal by 100

E.g. 0.67 x 100 = 67%

Percent to fraction: Get rid of the % sign and write the

number over one hundred (i.e. Make your number the

numerator and 100 your denominator). Simplify if possible.

E.g. 67/100 = (approriximatly) 2/3

FINANCIAL VOCABULARY

Percent – Parts per hundred

Profit – Financial gain. Specifically it is the

difference between the amount the earned

and the amount spent on buying/producing.

Loss –

Selling Price –

Buying Price

Discount –

Mark-up –

MARK-UPS AND PROFITI buy lollipops that cost me $1 each. I am selling them to other people for $1.30Have I changed the price?

How much have I changed the price by?

Am I making a profit?

How much is my profit?

LOLLIPOP REVIEW

I bought the lollipops for $___. Therefore, my buying price

was $__ Buying price is how much the (re)seller paid.

I sold the lollipops for $____. Therefore my selling price was

$___. Selling price is how much the seller sells a product for.

I added $____ to the buying price. Therefore, the mark-up

was $___. A mark-up is how much a product’s price is

increased by the seller. A mark-up may be equal to profit.

MARK-UPS

Shops mark-up (increase) the price of the

products that they buy from wholesalers so that

they can make money (a profit). This means

they sell things for more than they pay for

them. A mark-up is how much the shops

increase the price of a product or the difference

between the buying price and the selling price.

It can be calculated using this formula:

Mark-up = Selling price – Buying Price

CALCULATING A MARK-UPA shop buys a dress to resell. It costs the shop $44.50. The shop

decides to resell the dress for $72.30. What mark up has the shop

made?Buying price = $44.50

Selling price = $72.30

1)Write formula: Mark-up = Selling Price – Buying Price

2)Substitute values into formula: Profit = $72.30 - $44.50

3)Calculate answer: Profit = $27.80

4)Write your answer in a sentence: The shop has marked up

the dress by $27.80.

CALCULATING MARK-UPSA grocery store buys apples at $2.01 per kilogram

and decides to resell them for $4.67 per kilogram.

What is the mark up on each kilogram?

APPLE ANSWER

Mark up = selling price – buying price

Mark up = $4.76 - $2.01

Mark up = $2.75

CALCULATING MARK-UPS

*Billy buys a chocolate bar for $1.20 and decides to resell it

for $2.40. What is the mark-up?

**A car dealer buys a car off a manufacturer for $10 500.

The car dealer decides to sell the car for $14 350. What is

the mark-up?

**Mary buys a television for $1433.45. She sells it for

$1554.24. What mark-up has she made?

***Kate buys a CD for $12.50. If she wants to mark-up the

CD by $3.40, how much should she sell the CD for?

P E RC E N TAG E S I N F I N A N C I A L M AT H E M AT I C S

Have you ever gone to a shop and seen a % sign?

PERCENTAGES IN F INANC IAL MATHEMAT ICS

Percentages are often used in financial

mathematics.

We can explain mark ups using

percentages!

MEET BETH!

Meet Beth. She owns

and manages a clothing

boutique. Every week

she receives new stock

for her store, such as

dresses, t-shirts, suits

and shoes.

BETH’S DILEMMA

The thing is, Beth buys all these

clothing and accessories for different

prices. One day she receives an order

of t-shirts, which cost $12.33 per t-

shirt, and an order of party dresses,

which cost $113.50 per dress.

$113.50

BETH’S DILEMMA

Beth decides that it would be reasonable to

mark up the price of the dress by $34.05 –

so that it will be resold at $147.55.

However, she cannot justify marking up

the price of the t-shirt by the same

amount.

WHAT TO DO?

How can Beth be fair and

consistent with her mark-

ups?

BETH’S MARK-UP IDEA!

Beth does some research and realises that

if she marks each product by a certain

percentage she can be consistent!

MARK-UPS AS A %

Often retailers decide to mark-up

products based on their buying price

They may use a percentage of the

buying price to figure out a fair selling

price

HOW IS THIS DONE?Let’s say Beth decides to mark up the t-shirt by 30%

First, we find what 30% of the t-shirts buying price is:

$12.33 x (30/100) = $3.70 [The mark up is $3.70]

Then we add that amount to the buying price: $12.33 +

$3.70 = $16.03

Therefore, the selling price of the t-shirt will be $16.03.

QUESTIONS!

*The buying price of a piano was $750. The mark up is 50%.

How much is the mark-up in dollar value?

**Craig bought a pair of shoes for $25. He wants to mark

up the shoes by 25%. How much will he sell them for?

***Ronald buys apples at $3.25 per kilogram. He wants to

mark up the price by 36.5%. What is the dollar value of the

mark up per kilogram? How much will each kilogram sell

for?

EXTEND!

The following link will take you to a

quiz where you can test your

knowledge of discounts (coming soon!)

and mark-ups!

Mark-ups and Discounts – click here!