Section 27.1 Calculating Prices Chapter 27 pricing math Section 27.2 Calculating Discounts

CONNECT Why is setting a price an important part of the marketing mix? Calculating Prices Section 27.1

Explain how a company’s profit is related to markup. Use the basic formula for calculating a retail price. Calculate dollar and percentage markup based on cost or retail. Calculate markdowns in dollars and percentages. Calculate maintained markup in dollars and percentages. Section 27.1 Calculating Prices

Pricing and profit have a direct relationship to each other. Retailers use different pricing formulas for calculating prices, markups, and markdowns. Calculating Prices Section 27.1

gross profit maintained markup Calculating Prices Section 27.1

Calculating Prices Identify the Formula for Calculating a Retail Price in the Middle Circle. Use Outer Circles to Note Other Formulas Section 27.1

Calculating Prices Identify the Formula for Calculating a Retail Price in the Middle Circle. Use Outer Circles to Note Other Formulas Section 27.1

Calculating Prices Profit and Markup Section 27.1 gross profit The difference between sales revenue and the cost of goods sold. The markup (margin) on an item is the same as gross profit.

Calculating Prices Profit and Markup Section 27.1 Goals of Pricing

Calculating Prices Profit and Markup Section 27.1 Goals of Pricing

Calculating Prices Profit and Markup Section 27.1 Three Basic Ways to Perform Markup

Calculating Prices Profit and Markup Section 27.1 Three Basic Ways to Perform Markup

Calculating Prices Profit and Markup Section 27.1 Calculate Percentage Markup on Retail

Calculating Prices Profit and Markup Section 27.1 Calculate Percentage Markup on Retail

Calculating Prices Profit and Markup Section 27.1 Calculate Percentage Markup on Cost

Calculating Prices Profit and Markup Section 27.1 Calculate Percentage Markup on Cost

Calculating Prices Profit and Markup Section 27.1 The Cost Method of Pricing

Calculating Prices Profit and Markup Section 27.1 The Cost Method of Pricing

Calculating Prices Profit and Markup Section 27.1 Convert the Markup on Retail to the Markup on Cost and Apply it to the Cost of an Item

Calculating Prices Profit and Markup Section 27.1 Convert the Markup on Retail to the Markup on Cost and Apply it to the Cost of an Item

Calculating Prices Profit and Markup Section 27.1 A Second Method of Calculating the Retail Price from the Cost and the Markup on Retail

Calculating Prices Profit and Markup Section 27.1 A Second Method of Calculating the Retail Price from the Cost and the Markup on Retail

Calculating Prices Calculations for Lowering Prices Section 27.1 Lowering Prices

Calculating Prices Calculations for Lowering Prices Section 27.1 maintained markup The difference between an item’s final sale price and its cost. What is maintained markup?

Calculating Prices Calculations for Lowering Prices Section 27.1 Steps to Determining Maintained Markup

Calculating Prices Calculations for Lowering Prices Section 27.1 Steps to Determining Maintained Markup

Calculating Prices Discuss why retailers prefer to use markup percent based on the retail price instead of the markup percent on cost. Section Retailers prefer markup percent based on retail price because the markup on retail price sounds like a smaller amount and makes the price seem more reasonable to the consumer. Future markdowns and discounts are calculated on a retail basis. Profits are generally calculated on sales revenue. Section 27.1

Calculating Prices Identify when the markup equivalents chart is used to calculate retail prices. Section The markup equivalents chart is used to calculate retail prices when you know the cost and you know the percent of markup you want based on retail price. Section 27.1

Calculating Prices Explain when the initial markup is the same as the maintained markup. Section When no markdowns are taken, the initial markup and maintained markup are the same. Section 27.1

CONNECT What was the last discounted item you purchased? Calculating Discounts Section 27.2

Utilize a general procedure for figuring discounts and net prices. Calculate discounts in dollars and percentages. Calculate net amount. Section 27.2 Calculating Discounts

Discounts affect the final price a customer will pay. It is essential to learn how to calculate discounts and the net price payable. Calculating Discounts Section 27.2

employee discounts Calculating Discounts Section 27.2

Calculating Discounts Procedures for Calculating Discounts, the Net Amount Payable, and Examples of Discounts Offered by Employers and Vendors Section 27.2

Calculating Discounts Procedures for Calculating Discounts, the Net Amount Payable, and Examples of Discounts Offered by Employers and Vendors Section 27.2

Calculating Discounts Section 27.2 Discounts How to Calculate a Discount in Dollars Along with an Item’s Net Price

Calculating Discounts Section 27.2 Discounts How to Calculate a Discount in Dollars Along with an Item’s Net Price

Calculating Discounts Section 27.2 Discounts employee discount A discount offered to workers by their employers. Employee discounts can range from 10 percent to 30 percent for entry-level employees.

Calculating Discounts Section 27.2 Discounts Types of Discounts

Calculating Discounts Section 27.2 Discounts Types of Discounts

Calculating Discounts Section 27.2 Discounts How to Calculate a Trade Discount Based on a Series

Calculating Discounts Section 27.2 Discounts How to Calculate a Trade Discount Based on a Series

Calculating Discounts Section 27.2 Discounts Quantity Discounts No. of items1–2425–4849–72 Unit Price$0.95$0.90$0.85

Calculating Discounts Section 27.2 Discounts Promotional Discounts STEP 1Divide the dollar discount by the original price. The answer will be a decimal. D($) divided by P = D(%) $250 ÷ $10,000 =.025 STEP 2 Change the decimal to a percentage by shifting the decimal point two places to the right. This figure is the percentage discount. When necessary, round the percentage to the tenths place..025 = 2.5%

Calculating Discounts Section 27.2 Discounts Potential Pitfalls of Discount Pricing Frequent sales can numb customer response. Some businesses have to offer very deep discounts to see an increase in traffic. Price promotions may set a precedent. Poorly planned discounts can lead to price wars.

Calculating Discounts Explain why employers offer employee discounts. Section Offering discounts encourages employees to buy and use the products in the hope that they will then project confidence in the products and enthusiasm when selling those products. Section 27.2

Calculating Discounts Identify what the number “3” represents in invoice terms 3/10, net 45. Section The number “3” indicates that the buyer will receive a 3 percent discount if the invoice is paid within 10 days. Section 27.2

Calculating Discounts Discuss why vendors offer seasonal discounts. Section Vendors offer seasonal discounts to encourage buyers to purchase goods long before the consumer buying season. Section 27.2

End of Section 27.1 Calculating Prices Chapter 27 pricing math Section 27.2 Calculating Discounts