Updated November 30, 2020
by Lisa Maloney
If you've ever bought clothes on sale, you're familiar with the concept of a discount, or reducing the price by a certain percentage. A markup works the other way around: the price isincreasein a certain percentage. Retailers do this every day because they pay a price for their products (the wholesale price) and then add a markup to create the retail price at which they sell to you. Often the markup from wholesale price to retail price can be as much as 50 percent, but some retailers sell at lower markups, e.g. B. 20 percent.
TL; DR (too long; unread)
Multiply the original price by 0.2 to find the amount of a 20 percent markup, or multiply by 1.2 to find the total price (including markup). If you have the final price (including the markup) and want to know what the original price was, divide it by 1.2.
Find a 20 percent markup on wholesale
If you know the wholesale price of an item and want to calculate how much to add for a 20 percent markup, multiply the wholesale price by 0.2, which is 20 percent as a decimal. The result is the amount of markup to add.
So if you break up a pair of pants that cost $50, the markup amount is:
\$50 × 0,2 = \$10
If you want to calculate the total price after the markup, add the original price plus the markup:
\$50 + \$10 = \$60
So the final price of the pants would be $60.
Find the whole wholesale price
If you want to go directly to the total price of the itemafter20 percent markup, multiply wholesale price by 1.2. This is 100 percent of the original wholesale price plus 20 percent markup, or 120 percent of the total expressed as a decimal.
With the same pants as in the previous example, you would have:
\$50 × 1,2 = \$60
Note that you get exactly the same result as calculating the markup alone and then adding it to the original price, but you saved a step.
Finding the original price after a markup
Here's another aspect to consider: what if you know how much an item costs after the 20 percent markup, and you want to know what the original price was before the markup? Thinking about the example above, you know that after a 20 percent markup, the final price is 120 percent of the original price. Therefore, you can calculate back to the original price by dividing by 120 percent as a decimal, which is 1.2.
For example, if you know that the pair of pants you're considering costs $60 after markup, it's not surprising if you calculate like this:
\$60 ÷ 1,2 = \$50
... you end up back at the original price of the trousers.