How to Calculate a Mark-Up Price

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A successful business is one that will make a profit, and the only way you can make a profit is by charging more for the items you're selling than what you paid for them. The difference between your cost and your consumer's cost is called the "mark-up price." Determining how high your mark-up can be is often difficult. If your mark-up is too high, your customers won't buy your products. But if your mark-up is too low, you won't make enough money to cover your costs.

Things You'll Need

  • Calculator
  • Write down how much it cost you to purchase the product you are selling. Let's say the baseball you bought wholesale cost $2.50.

  • Write down the mark-up percentage you'd like to apply to the item you are selling. Let's assume you'd like to use a mark-up of 25% on the baseball.

  • Divide your mark-up percentage by 100 to convert it to a decimal. In this example, 25 divided by 100 is 0.25.

  • Subtract the result from Step 3 from 1. In the this example, 1 minus 0.25 is 0.75.

  • Divide the original cost of your product by the result you obtained in Step 4. This result will be what you charge a customer to purchase the product. In the baseball example, you would divide $2.50 by 0.75, and the result would be 3.34. Your selling price would be $3.34.

  • Subtract the the amount you paid for the product from the result in Step 5 to determine the mark-up price. In the baseball example, you would subtract $3.34 from $2.50. The mark-up price of the baseball is 84 cents.

References

  • Photo Credit Comstock Images/Comstock/Getty Images
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