Selling Price Markup
What is the Selling Price Markup?
Selling Price is the retail price (the amount you sell the product or service for). Where as the markup is the amount you add to the purchasing price to get your selling price (retail price) of your product.
What is the Selling Price Markup like?
The Selling Price Marketup is like setting out a plan for yourself to reach a certain reputation that you want to be known by. In setting out to get this reputation you need to know how much it will take to get this image ie; clothing, qualification etc. Than you need to realise how long this is going to take. Thus the end result you being known as one of the best fashion icons earning lots of money.
What is the purpose of the Selling Price Markup?
The purpose of having a markup is so that you know what you should be selling your product or services as. This way you’re making a profit for your business as well, as being fair to your customers by not over charging a ridiculous amount.
What are the different types of Selling Price Markup?
There are two ways to figure out your markup to get your selling price. The first way is COST+MARKUP=SELLING PRICE (C+M=S). (Markup can also be shown in two different ways, one being a dollar amount and the other a percentage).
One example is: I was buying a lipstick from the supplier for $3.16 each and wanted the markup to be 20%($0.79). I would work out the Selling Price as shown below.
C+M=S 80%+20%=100%(100%-20%=80%) $3.16+$0.79=$3.95
Part=Base × Rate P=3.95×0.20=0.79
Another example is: Say I bought a 5 pack of lipsticks at $5.15 and I wanted to sell the 5 pack at $15.45 to find out how much the markup was I would work it out as shown be.
COST=$5.15 SELLING PRICE=$15.45 MARKUP= 15.45-5.15=$10.30
Markup Based on Cost: R=P/B=10.30/5.15=2=200%
Markup Based on Selling Price: R=P/B=10.30/15.45=.667=66.7%
What is involved with applying the Selling Price Markup?
Firstly you need to know the price you’re paying for your product to ensure you’re not paying too much. Also it is a good to know what prices your competition is selling their product for. This way you know you’re not over charging your customers or ripping yourself off. After this you now need to do the figures by using the formulas as shown in question 4.
Where does applying the Selling Price Markup fit into the sales process of a business?
This should be done before you even start selling your product. This way it tells how much you should sell each individual product for and to make sure you will have enough to cover overhead expenses while also making yourself a profit. Ideally it would be good to have this done while doing your business plan so than you have a good estimate of what your expense etc are going to be.
How does applying the Selling Price Markup impact on different areas of the business?
This impacts on all areas of your business as it will determine whether or not your company will last. If you are charging to less for your product or service majority of the time you will just be braking even ensuring that the business is not making any profit thus for it will not last. It is very important that you ensure your business with enough leeway ie; not over paying for your product/service, so than no matter what you will be turning over a profit and ensuring your business with success.
What terms are used when apply Selling Price Markup?
Terms commonly heard when applying the Selling Price Markup are Cost, Suppliers Cost, Markup, Selling Price, Retail Price, Part, Base and Rate. You may also come across some term like Margin, Profit and Breaking Even.
Where can I find more information about applying the Selling Price Markup?
For more information on this topic you can go to the following websites: