Markup (or price spread) is the difference between the selling price of a good or service and cost. It is often expressed as a percentage over the cost. A markup is added into the total cost incurred by the producer of a good or service in order to cover the costs of doing business and create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and distribute a product.[1] Markup can be expressed as a fixed amount or as a percentage of the total cost or selling price.[2]Retail markup is commonly calculated as the difference between wholesale price and retail price, as a percentage of wholesale. Other methods are also used.
What does mark-up mean? To define textual content within a document by inserting tags into the appropriate locations. The tags may also refer to.
Markup (or price spread) is the difference between the selling price of a good or service and cost. It is often expressed as a percentage over the cost. A markup is added into the total cost incurred by the producer of a good or service in order to cover the costs of doing business and create a profit. Definition: Markup is a term used to define the difference between the cost of any good, service, or financial instrument and its current selling price. In other words, it is the result of subtracting selling price minus cost. What Does Markup Mean? What is the definition of markup? An amount added to a cost price in calculating a selling price, especially an amount that takes into account overhead and profit.
Markup Meaning In Urdu
Price determination[edit]
Profit[edit]
- Assume: Sale price is 2500, Product cost is 1800
- Profit = Sale price − Cost[3]
- 700 = 2500 − 1800
Markup[edit]
Below shows markup as a percentage of the cost added to the cost to create a new total (i.e. cost plus).
- Cost × (1 + Markup) = Sale price
- or solved for Markup = (Sale price / Cost) − 1
- or solved for Markup = (Sale price − Cost) / Cost
- Assume the sale price is $1.99 and the cost is $1.40
- Markup = ($1.99 / 1.40) − 1 = 42%
- or Markup = ($1.99 − $1.40) / $1.40 = 42%
- To convert from markup to profit margin:
Markup Meanings
- Sale price − Cost = Sale price × Profit margin
- therefore Profit Margin = (Sale price − Cost) / Sale price
- Margin = 1 − (1 / (Markup + 1))
- or Margin = Markup/(Markup + 1)
- Margin = 1 − (1 / (1 + 0.42)) = 29.5%
- or Margin = ($1.99 − $1.40) / $1.99 = 29.6%
A different method of calculating markup is based on percentage of selling price. This method eliminates the two-step process above and incorporates the ability of discount pricing.
- For instance cost of an item is 75.00 with 25% markup discount.
- 75.00/(1 − .25) = 75.00/.75 = 100.00
Comparing the two methods for discounting:
- 75.00 × (1 + .25) = 93.75 sale price with a 25% discount
- 93.75 × (1 − .25) = 93.75 × .75 = 70.31(25)
- cost was 75.00 and if sold for 70.31 both the markup and the discount is 25%
- 75.00 /(1 − .25) = 100.00 sale price with a 25% discount
- 100.00 × (1 − .25) = 100.00 × .75 = 75.00
- cost was 75.00 and if sold for 75.00 both the profit margin and the discount is 25%
These examples show the difference between adding a percentage of a number to a number and asking of what number is this number X% of. If the markup has to include more than just profit, such as overhead, it can be included as such:
- cost × 1.25 = sale price
or
- cost / .75 = sale price
Aggregate supply framework[edit]
P = (1+μ) W. Where μ is the markup over costs. This is the pricing equation.
W = F(u,z) Pe . This is the wage setting relation. u is unemployment which negatively affects wages and z the catch all variable positively affects wages.
- Sub the wage setting into the price setting to get the aggregate supply curve.
P = Pe(1+μ) F(u,z). This is the aggregate supply curve. Where the price is determined by expected price, unemployment and z the catch all variable.
See also[edit]
References[edit]
Markup Language Meaning
- ^Pradhan, Swapna (2007). Retailing Management. Tata McGraw-Hill. ISBN978-0-07-062020-9.
- ^Ingels, Jack (2009). Ornamental Horticulture: Science, Operations, & Management. Cengage Learning. p. 601. ISBN978-1-4354-9816-7.
- ^Farris P.W., Bendle N.T., Pfeifer P.E. and Reibstein D.J. (2010). Marketing metrics : The Definitive Guide to Measuring Marketing Performance, Pearson Education.
Html Markup Meaning