Markup-on-Selling-Price Pricing Method
Many resellers, and in particular retailers, discuss their markup not in terms of Markup-on-Cost but as a reflection of price. That is, the markup is viewed as a percentage of the selling price and not as a percentage of cost as it is with the Markup-on-Cost method. For example, using the same information as was used in the Markup-on-Cost, the Markup-on-Selling-Price is reflected in this formula:
Markup Amount = Markup Percentage
Selling Price
$15 = 23%
$65
The calculation for setting initial price using Markup-on-Selling-Price is:
Item Cost = Price
(1.00 – Markup Percentage)
$50 = $65
(1.00 – .23)
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