Selling Price
In order to make money by selling
a product, you need to sell it for
more than it costs.
How do you determine how much
to charge for a product?
Lesson Objective
Calculate the selling price of an item based on cost and
markup rate based on selling price.
Example 1
VJ’s Sporting Goods Store aims for a
markup that is 40 percent of the selling price
of its merchandise.
The store received a shipment of running
shoes at a cost of $38.99 per pair.
What is the minimum selling price the store
should charge?
Example 1 (cont.)
Sales for Month: $42,000
Percent of Total Sales
Cost of goods sold
$25,200
60%
Overhead expenses
$ 8,400
20%
Profit
$ 8,400
20%
TOTAL
$42,000
100%
(Note: Markup plus cost equals selling price. If the markup is 40
percent of the selling price, then the cost must be 60 percent of
the selling price. Sixty percent is the complement of 40 percent.)
Example 1 Answer: Step 1
Find the complement of the markup rate.
100% – 40% = 60%
Example 1 Answer: Step 2
Find the selling price.
Cost ÷ Complement of Markup Rate
$38.99 ÷ 60% = $64.98
Example 2
Circuit Town purchased some digital
cordless phones for $31.99.
Its markup policy is 20 percent based on the
selling price.
What is the selling price of the phones?
Example 2 Answer: Step 1
Find the complement of the markup rate.
100% – 20% = 80%
Example 2 Answer: Step 2
Find the selling price.
Cost ÷ Complement of the Markup Rate
$31.99 ÷ 80% = $39.99
Practice 1
Find the selling price.
Cost: $19.99
Markup: 25 percent of selling price
Practice 1 Answer
$26.65
Practice 2
Hillard Jewelers marks up necklaces 65
percent of the selling price.
The cost of one necklace is $89.50.
What is the selling price?
Practice 2 Answer
$255.71