Math CentralQuandaries & Queries


Question from Lisa:

Ok i want to mark a products up 30%, I would take 5.00X3o%,but my boss does it another way I have yet to figure out he takes cost divided by 70% or something like that I am so lost can you help? PLEASE

We have two responses for you


The difference in your calculations comes from not clearly specifying precisely what you mean by 30%.

You have calculated 30% of the cost. When the cost is $5.00 you add 0.30 × $5.00 = $1.50 to obtain a selling price of $5.00 + $1.50 = $6.50. This is what I would call a markup of 30%.

Your boss has calculated the markup as 30% of the selling price. To say this another way the $5.00 cost is 70% of the selling price. That is

0.70 × (selling price) = $5.00.

Thus selling price = $5.00/0.70 = $7.14. This is what I would call a margin of 30%.

So it comes down to precisely what the markup is. Is it 30% of the cost or 30% of the selling price?




Let's say you want to mark up the product by 30%. Doing it your way, the new price is (old price) + 0.30x(old price) = 1.30 x old price.
It is not the same to say that the old price is 70% of the new price, that is (old price) = 0.70x(new price), so that (old price) / 0.70 = new price.

Let's try it with some numbers. Suppose the old price is $100. Then according to your calculation, the new price is 1.30x$100 = $130.
According to the other calculation, the new price would be $100 / 0.70 = $142.85. That's quite different. The reason is that 130% of 100
is quite different than 70% of 130.

Maybe you had best talk to your boss to figure out which method he uses, and what he would prefer done in the store.

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