When businesses price their items for sale, the difference between the wholesale cost of the item and the retail price is called the markup. Businesses usually report the markup as a percentage. If you know the sales price and the markup percentage, you can calculate the original price before the markup has been added.
- Skill level:
Convert the percentage markup to a decimal by dividing by 100. For example, if you were using a 20 per cent markup, you would divide 20 by 100 to get 0.2.
Add 1 to the markup expressed as a decimal. In this example, you would add 1 to 0.2 to end with 1.2.
Divide the price after markup has been added by the result from step 2 to find the price before the markup. For example, if the final price of the item is £156, you would divide £156 by 1.2 to find the price before the markup to be £130.
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