Mark-on, Mark-up and

Markdown

Santos, Bernadette Louise Y. De La Salle University

MARK-ON, MARK-UP and MARK-UP RATE
Definition:
Cost is the price that a company or store has to pay for the
goods it is going to sell, it is the price that has to be spent to
produce goods or services before any profit is added. If a
trader bought a product for Php100, this is the cost of the
product as far as the trader is concerned.

Operating cost is the price (per unit) incurred relative to the

production and sale of a commodity.

 Selling price is the price at which the commodity is sold per

unit.
 
MARK-ON, MARK-UP and MARK-UP RATE
Definition:
 Selling price is the price at which the commodity is sold
per unit.
  S = C+ E + P
Where: S = Selling price
C = Cost price
E = Operating Expenses
P = Profit
Profit is the money earned after the set price and the
operating costs are accounted for after the sale of a
commodity.
MARK-ON, MARK-UP and MARK-UP RATE
Definition:
 Mark up is the difference between the selling price and the
cost price sometimes referred to as margin or gross profit.
MU = S - C
Where: MU = Mark-up
S = Selling price
C = Cost Price
Example 1. Aling Vienna would like to sell a mini jewelry
box she purchased from from divisoria fo for Php12 each. If
the operating cost is set at 25% of the cost and she would
like to have a 15% profit on the cost of each item,
a.Determine the mark-up price for each mini jewelry box.
b.Help Aling Vienna determine the selling price for each
mini jewelry box.
MARK-ON, MARK-UP and MARK-UP RATE
Definition:
  Solution:
a. MU = E + P
= 0.25 x 0.15 x 12
= Php 4.80
The mark-up price for each trinket is Php 4.80
b. S = C + MU
= Php 12 + Php 4.80
= Php 16.80
MARK-ON, MARK-UP and MARK-UP RATE

Example 2. A Jacket which costs Php 1,350 is being sold at

Php 2,025. What is the rate of mark-up based on cost?
Solution:
MARK-ON, MARK-UP and MARK-UP RATE

Example 3. Joy buys a notebook with a cost of P45. The

rate of mark-up based on cost is 25%. Find the selling
price and the mark-up.
Solution:
MU = 0.25 x P45
= Php 11,25

S = Php 45 + Php 11.25

=Php 56.25
The selling price of Joy’s notebook is Php 56.25 which
includes a mark- up of Php 11.25.
MARK-ON, MARK-UP and MARK-UP RATE

Example 4. Kim decides to impose a mark-up of P 25 on

each pen he sells to his classmates and friends. This
represents a 20% mark-up based on the selling price.
Find the cost and the selling price of the pens Kim sells.
Solution:
MU = 0.20 x S
5 = 0.20 x S
S = 5/0.2
S = Php 25

The selling price of each pen Kim sells is Php 25.00

MARK-ON, MARK-UP and MARK-UP RATE

C = S - MU
= Php 25 – Php 5 = Php 20.00
Kim’s pens had a cost price of Php 20.00
MARK-ON, MARK-UP and MARK-UP RATE

Example 5. Find the cost and mark-up of a box of pencils

being sold for Php 135 with a 25% mark-up based on
selling price.
Solution:
MU = 0.25 x S
=0.25 x Php 135 Php 33.75

C = S - MU
= Php 133 – Php 33.75
= Php 101.25
The cost of the box of pencils is Php 101.25 and the
mark-up is Php 33.75
MARK-ON, MARK-UP and MARK-UP RATE

When the price of a retail product increases fairly soon

after another increase is called Mark-on.
MO = PS – S

Where: MO = Mark-on
PS = Peak Selling Price
S = Regular Selling Price
MARK-ON, MARK-UP and MARK-UP RATE

Example 6. Manang Crising observes that market goers

prefer to buy fish from her because there is an under
supply of meat in the market. She then decides to
increase the price of galunggong by Php 10 per kilo. If
the cost of galunggong is Php 90 per kilo with a 35%
mark-up, what is its new selling price with the
additional increase of Php10? By how much is the rate of
mark-up based on cost increased by adding Php10 to the
regular selling price of the galunggong?
MARK-ON, MARK-UP and MARK-UP RATE

Solution:
MARK-ON, MARK-UP and MARK-UP RATE

The mark-up is increased by 11.11% by the additional

mark-on of Php 10 imposed by Manang Crising.
MARK-ON, MARK-UP and MARK-UP RATE

Example 7. Ivy’s Flower Shop imposes a 45% mark-up on

flowers delivered to them for sale. During All Saint’s
Day, however, an additional mark- on of 25% of the
regular selling price is added on. Determine the unit
price of 300 roses worth Php15,000 delivered to I v y ’ s
Flower Shop during All Saint’s Day. How much is the
selling price of each rose during All Saint’s Day at this
flower shop?
MARK-ON, MARK-UP and MARK-UP RATE

Each Rose sells

for Php 90.65 at
Ivy’s Flower
shop during All
Saint’s Day
MARK-ON, MARK-UP and MARK-UP RATE

Example 8. Find the regular selling price and the cost price of
memorabilia items being sold for Php500 if the mark-up is set
at a rate of 25% of the cost price with an approved 15% mark-
on rate based on the cost price included because of a special
event.

The regular selling

price of the
memorabilia item
is Php446.43.
MARK-ON, MARK-UP and MARK-UP RATE

Mark-down is a reduction from the regular selling price of a

product resulting in a lower price. This lower price is called
the sale price to distinguish it from the selling price. It is the
difference between the regular selling price and sale price
M = S - SP
Where:
MD = Mark-down
S = Selling price
SP = Sale Price
MARK-ON, MARK-UP and MARK-UP RATE
Definition:
What is Mark-On?
A mark-on is the difference between the cost of good
and its selling price. It is also referred to as the mark-up
price. Mark-on price is the price at which the company
achieves profit, after all its production costs have been
incurred. Production costs include all the fixed costs and
the variable costs. Mark-on can be calculated in the form
of percentage or value.
A mark-on of 10% indicates that if the Cost price of
the item is Php 100, then the Selling price would be Php
110.

Mark-on - original price, denoted by M

MARK-ON, MARK-UP and MARK-UP RATE
Definition:
Additional mark-on is the additional increase in the
price of the commodity, done to achieve higher profits,
due to the increase in demand of the commodity during
various seasons or holiday period. This strategy is used by
various manufacturers who produce goods that have a
seasonal variation in demand.
MARK-ON, MARK-UP and MARK-UP RATE
Definition:
Example:
Air conditioners (AC’s). Companies manufacturing
AC’s increase the price of AC’s during peak summer
seasons of April-May. Though the prices are already set
high at the beginning of the summer season i.e. in March,
they put an additional mark-on in the months of April-
May to increase profits.
Mark-on, Mark-up, Mark-up
rate
Definition
Mark-on - original price, denoted by Mo
Mark-up percentage - any amount increase on the mark-on,
denoted by Mu

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 2/8

Mark-on, Mark-up, Mark-up
rate
Definition
Mark-on - original price, denoted by Mo
Mark-up percentage - any amount increase on the mark-on,
denoted by Mu
Mu
Mark-up rate - denoted by r and r = Mo

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 2/8

Mark-on, Mark-up, Mark-up
rate
Definition
Mark-on - original price, denoted by Mo
Mark-up percentage - any amount increase on the mark-on,
denoted by Mu
M
Mark-up rate - denoted by r and r = u Mo
New price - new selling price, denoted by S
Mark-on, Mark-up, Mark-up
rate
Definition
Mark-on - original price, denoted by Mo
Mark-up percentage - any amount increase on the mark-on,
denoted by Mu
Mu
Mark-up rate - denoted by r and r = Mo
New price - new selling price, denoted by S

Example
In 2012, Angela bought a residential lot for P350,000. The present
market value of the said property is P600,000. How much are the
mark-up percentage and the mark-up rate?
Mark-on, Mark-up, Mark-up
rate
Definition
Mark-on - original price, denoted by Mo
Mark-up percentage - any amount increase on the mark-on,
denoted by Mu
Mu
Mark-up rate - denoted by r and r = Mo
New price - new selling price, denoted by S

Example
In 2012, Angela bought a residential lot for P350,000. The present
market value of the said property is P600,000. How much are the
mark-up percentage and the mark-up rate?
Formula in Getting the Mark-up Percentage
and the Mark-up Rate
If an item is bought at a mark-on price Mo and sold at a higher price S ,
then the mark-up percentage Mu and the mark-up rate r can be
calculated using the formulas below.

Mu = S − Mo
Mu
r=
Mo
Formula in Getting the Mark-up Percentage
and the Mark-up Rate
If an item is bought at a mark-on price Mo and sold at a higher price S ,
then the mark-up percentage Mu and the mark-up rate r can be
calculated using the formulas below.

Mu = S − Mo
Mu
r=
Mo

Example
The selling of US$1 is P44. In the next 5 days, it is expected to get
higher and is projected to reach a 2.3% mark-up rate. In five days,
what is the expected selling price of a US doller in Philippine
peso?
Mark-down Percentage, Mark-down
Rate
If an item is bought on a mark-on price Mo and sold at a lower selling
price S , then the mark-down percentage Md and the mark-down rate
r can be calculated using the formulas below.

Md = Mo − S
Md
r=
Mo

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 4/8

Mark-down Percentage, Mark-down
Rate
If an item is bought on a mark-on price Mo and sold at a lower selling
price S , then the mark-down percentage Md and the mark-down rate
r can be calculated using the formulas below.

Md = Mo − S
Md
r=
Mo

Example
An item that regularly sells for P425 is marked down to P357. What is
the discount rate?

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 4/8

Mark-down Percentage, Mark-down
Rate
Example
David purchased a laptop for encoding and recording transactions for
his small business. After few months, he bought a new laptop so he
decided to sell his old laptop to a price 40% lower than its original
price. If the original price was Php22,000, how much did David sell the
laptop?

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 5/8

Gross
Margin
Definition
Gross Margin Mg = S − Mo
Gross Margin Rate represents the percent of total sales revenue
that the company retains after incurring the direct costs
associated with producing the goods/services it sells
The higher the percentage, the more the company retains on
each dollar of sales
Calculating the Gross Margin Rate:
Mg
r=
S

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 6/8

Gross
Margin

Example
Louise spent 2.4 million pesos for house construction. He then sells
the house at 3 million pesos. How much is the gross margin? What is
the gross margin rate?

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 7/8

Gross
Margin

Example
Louise spent 2.4 million pesos for house construction. He then sells
the house at 3 million pesos. How much is the gross margin? What is
the gross margin rate?

Example
If Louise wants to sell the house to have a gross margin rate of 25%,
then how much should he sell the house?

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 7/8

Exercise

1 Suppose we have an item that has a mark-on price of Php9,000

and we want to calculate the selling price with
an additional 10% mark-up percentage
an additional 10% gross margin

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 8/8

Exercis
e

1 Suppose we have an item that has a mark-on price of P9,000

and we want to calculate the selling price with
an additional 10% mark-up percentage
an additional 10% gross margin
2 Juan was asked by his boss to calculate the selling price of a
product that will cost P600,000 in production if
they will add a 20% mark-up percentage
they want a 20% gross margin
Find the required amount.

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 8/8

Seatwork

1 A compact ladder that regularly sells for P10,000 is marked

down to P6,000. What is the mark-down rate?
2 What is the gross margin for an item that originally costs P2,500
and sold at P2,000?
3 In 1995, David bought a 200 m2-lot for P20,000 only. This year,
he is planning to sell the lot for P2,000,000. How much is the
gross margin? What is the gross margin rate?
4 The new price of a certain product is now 25% the old price.
What is the mark-down rate?

Santos, Bernadette Louise Y. De La Salle University SY 2016-2017 9/8