Math behind Mark up %(non poker)

[Yeuts]

I want to know the math used to calculate mark up%. I am talking about the mark up % used by retailers to price goods for sale. The reason I want to know is so I can put the formula into a excel spreadsheet.

I want to be able to enter any two of the following. The cost amount, MU%, or selling price and be able to calculate the missing one. So I think I need 3 formulas.

I don't think I explained this very well. Sorry for the dumb question but it would be a great help if I could get it answered.

[elitegimp]

[ QUOTE ]
I want to know the math used to calculate mark up%. I am talking about the mark up % used by retailers to price goods for sale. The reason I want to know is so I can put the formula into a excel spreadsheet.

I want to be able to enter any two of the following. The cost amount, MU%, or selling price and be able to calculate the missing one. So I think I need 3 formulas.

I don't think I explained this very well. Sorry for the dumb question but it would be a great help if I could get it answered.

[/ QUOTE ]

I think these are the formulas you want:

Markup Percent = 100*(Price/Cost - 1) [100 = 100%]
Price = Cost*(1+Markup Percent/100)
Cost = Price / (1+ Markup Percent/100)

Examples:
* An object costs the store $5, they sell it for 6. The markup is 100*(6/5-1) = 100*(0.2) = 20 (as in 20% markup)
* An object costs the store $5, they mark it up 20%. Then the price is $5*(1+20/100) = $5*1.2 = $6.
* An object sells for $6 and is known to be marked up 20%. Then it originally cost the store $6/(1+20/100) = $6/1.2 = $5

Or this might not be what you asked at all [img]/images/graemlins/smile.gif[/img]

[Yeuts]

Thanks for the information. It works for finding the percentage. But I am looking for something a little different. I am having trouble explaining it as I don't understand it myself. [img]/images/graemlins/crazy.gif[/img]

Here are some examples that might clear it up.

Cost $1 Markup%10 = $1.1111 Selling price
Cost $1 Markup%20 = $1.2500 Selling price
Cost $1 Markup%30 = $1.4286 Selling price
Cost $1 Markup%40 = $1.6667 Selling price
Cost $5 Markup%20 = $6.25 Selling price

[carsten]

You (or whoever assigned this problem to you) are using a backwards (and in my opinion non-standard) definition of markup. In any context I have encountered, markup is a percentage applied to purchase cost, and elitegimp's are based on that definition.

In your examples, the "markup" is the discount you'd have to apply to the selling price to get the purchase cost back. For example, a selling price of $1.25 represents a 25% markup over the purchase cost of $1, but you'd have to subtract 20% of $1.25 to get back to $1.

The formula to calculate that percentage is

ass_backwards_non_standard_markup = (1 - cost/price) * 100%.

Solving this equation for calculating cost and price given the respective other two quantities is left as an exercise for the reader.

Hope this helps,

-Carsten

P.S. Aren't we a bit off topic here? This has nothing to do with probability theory.

[Yeuts]

[ QUOTE ]
You (or whoever assigned this problem to you) are using a backwards (and in my opinion non-standard) definition of markup.

[/ QUOTE ]

I agree, I ask the question as every calculator I see has a button marked MU. It generates these markups and I want to know the how/why behind it. I also want to use the MU function in a excel worksheet.

Thanks for pointing out a few things for me it helped. And sorry for the non poker question. This and this plus the replies here have cleared it up for me.

I can now make it work in excel to find the selling price when I know the cost and MU%. I can't figure out the other 2 formulas yet, sad I know.

PRICE=cost/(1-markup % on price) works

Thx again everyone. Maybe poker players should charge markup based on thier winrate when they are being staked. The backer gets the winnings and the players gets 40%MU of their expected winrate even if they lose in that session. [img]/images/graemlins/smirk.gif[/img]

[gergery]

The word you want here is “margin”, not markup.

Retailers like Wal-mart typically want a certain margin percentage for products they sell.
They calculate this by taking the price they expect to sell the item for at retail,

(Price – Cost) / Price = Margin

If you offer WalMart an item at $5.00, they will apply the standard margin they want to make in that category to the item, say 30%, to get the retail price they plan to offer, in this case, $7.14.

--Greg