# 11.13 Markdown

## Markdown

Step 1: The selling price and markdown percent are  = $39.99 and = 0.10, respectively. Step 2: Apply Formula 1.10 to calculate the sale price, resulting in . You could use either of Formulas 1.11a or 1.11b to calculate the markdown amount since the selling price, sale price, and markdown percent are all known. Arbitrarily choosing Formula 1.11a, you calculate a markdown amount of Therefore, if the retailer has a 10% off sale on the MP3 players, it marks down the product by$4.00 and retails it at a sale price of $35.99. Just as in Appendix B, avoid getting bogged down in formulas. Recall that the three formulas for markdowns are not new formulas, just adaptations of three previously introduced concepts. As a consumer, you are very experienced with endless examples of sales, bargains, discounts, blowouts, clearances, and the like. Every day you read ads in the newspaper and watch television commercials advertising percent savings. This section simply crystallizes your existing knowledge. If you are puzzled by questions involving markdowns, make use of your shopping experiences at the mall! Three of the formulas introduced in this section can be solved for any variable through algebraic manipulation when any two variables are known. Recall that the triangle technique helps you remember how to rearrange these formulas, as illustrated here. ### Example 1.3A – Determining the Sale Price and Markdown Amount The MSRP for the “Guitar Hero: World Tour” video game is$189.99. Most retail stores sell this product at a price in line with the MSRP. You have just learned that a local electronics retailer is selling the game for 45% off. What is the sale price for the video game and what dollar amount is saved?

Plan:
There are two unknown variables. The first is the video game’s sale price (). The second is the markdown amount () that is realized at that sale price.

Understand:
Step 1: The regular selling price for the video game and the markdown rate are known:

= $189.99 = 0.45 Step 2: Calculate the sale price by applying Formula 1.10. Calculate the markdown amount by applying Formula 1.11b. Perform: Step 2: Present: The sale price for the video game is$104.49. When purchased on sale, “Guitar Hero: World Tour” is $85.50 off of its regular price. ### Example 1.3B – Markdown Requiring Selling Price Calculation A reseller acquires an Apple iPad for$650. Expenses are planned at 20% of the cost, and profits are set at 15% of the cost. During a special promotion, the iPad is advertised at $100 off. What is the sale price and markdown percent? Plan: The unknown variables for the iPad are the sale price () and the markdown rate (). Understand: Step 1: The pricing elements of the iPad along with the markdown dollars are known: =$650

= $100 Calculate the selling price of the product by applying Formula 1.5. Step 2: Calculate the markdown percent by applying Formula 1.12. Calculate the sale price by applying Formula 1.11b, rearranging for . Perform: Step 1: Step 2: Present: When the iPad is advertised at$100 off, it receives an 11.396% markdown and it will retail at a sale price of \$777.50.

The section is reproduced from Chapter 4.3 in Fundamentals of Business Mathematics by OER Lab licensed under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International License

1. competition Bureau, Fair Business Practices Branch, Price Scanning Report, Table B, page 5, 1999, www.competitionbureau.gc.ca/epic/site/cb-bc.nsf/en/01288e.html