what math formula is used to do true mark up?

Question

I have contridicting informaiton that to truly mark a product up you divide rather than add...i.e to mark up 100.00 you simply multiply .10. Or do you divide using .90?

Answer 1

True markup is given as a percentage of the selling price, just as markdown is. Therefore, one has to use a table or a circular sliderule or go through a couple of steps of algebra for a true calculation, except for one of the most common: 50% markup is exactly doubling the wholesale price to get retail If one uses the same markup on a lot of things, it is possible to calculate the ratio and simply remember it.
(P - C)/P = M Price minus cost divided by Price = Markup
solve for P given C and M
(P-50)/P = 0.90
P/P -50/P = 0.90
1-50/P =0.9
1-0.9 = 50/P
0.1 P = 50
P = 500 a 90% markup, takes a cost of 50 to 500 price.

Answer 2

Quick introduction.
First the most important thing to know is that there is no such thing as 100% mark-up in the marketing math world. 100% in layman s terms is called keystoning in Marketing and is really a 50% mark- up. If it cost $5 and you want a 50% mark-up or keystone the retail is $10. ***** 5 / .5 = 10

Let s go to 25% markup now that you are confused about there not being a 100% markup.

If something costs $5 and you want a mark-up of 25%
You need to subtract 25% from 100% and then divide the Cost($5) by the Markup 25%(.75)
5 /.75 = $8.75

Here is the IMPORTANT REASON because let s say we have a 25% off sale.
retail is $8.75. 25% off is $2.19 The sale price is $6.56 but we only paid $5 for so we still make money. $1.56 Marketing Math is not what a normal humans think mark-up should be.

How most people think it works like this.
If you just took 25% of $5 which = $1.25 and added it to the cost making retail $6.25
If you had a sale of 25% off $6.25 is $1.56 making the retail price $4.69. You just lost money. -$0.31