Calculating a price based on markup

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Question from Sheldon:

I know the most common form for retail businesses of calculating a price based on markup is:
Cost/(1 - Markup), but how is this supposed to work for a business that desires a markup of over 100%.

For example, If you have an item with a cost of $200 and you desire a markup of 300% of the selling price,
then your equation should be:
$200/(1-3), but this gives you a selling price of negative $100.
Could you please explain to me how to calculate the final price of an item using the formula for markup on final selling price when the markup is over 100%.

Thanks in advance for your help!

Hi Sheldon,

The markup as a dollar amount is part of the selling price so it can't be more than 100% of the selling price. In your example do you want the markup to be 300% of the cost? If so then you had a cost of $200 so the markup would be 300% of $200 or 3 × $200 = $600. The selling price would then be $200 + $600 = $800 and the markup is 75% of the selling price.

Harley







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