MWA 10: 1.3 Setting Price

1. Setting a Price
Slide 1
Definitions:
Markup: the difference between the amount a dealer sells a product
for and the amount he/she paid for it.
Percent: percent means “out of 100”; a percentage is a ratio in which
the denominator is 100.

2. Hints:
Slide 2
To change a number written
as a percent to a fraction,
write the number over 100.
23%
23
100

3. Hints:
Slide 3
To change a number written
as a percent to a fraction,
write the number over 100.
23%
23
100
To change a fraction to a
decimal, divide the denominator
into the numerator.
26
40
26 40 0.65

4. Hints:
Slide 4
To change a number written
as a percent to a fraction,
write the number over 100.
23%
23
100
To change a fraction to a
decimal, divide the denominator
into the numerator.
26
40
26 40 0.65
Since a percentage is a fraction
over 100, you can convert it to a
decimal by dividing the
percentage by 100.
27% 27 100 0.27

5. Slide 5
Prices are affected by several factors – for example:
• cost of materials
• demand (do customers want the item?)
• availability (is there enough of the item to meet the demand?)
• amount of markup that is added so that a profit is made
• taxes
Setting a Price
So… possible scenarios could be…
Price = cost of materials + markup + taxes
or
Price = original price + taxes
or
Price = cost of item + markup

6. Slide 6
How to Calculate Markup
Original Price = $8.45
Markup = 15%
Original Price x Markup (as a decimal)
= 8.45 x 0.15
=1.27 (rounded to 2 decimals)
How to Calculate Tax
Original Price = $16.75
5% GST
Original Price x Tax (as a decimal)
= 16.75 x 0.05
= 0.84 (rounded to 2 decimals)

7. Slide 7
Example 1:
Susan operates a pet store. She purchases Brand A dog food
at the wholesale price of $48 per bag of dog food. Susan
charges 15% markup. What will the price of the dog food be
before taxes?
Price = wholesale price + markup
Markup = wholesale price x percent markup
= 48 x 0.15
= 7.20
Price = 48 + 7.20 = 55.20
Answer:
The price of the dog food
will be $55.20 per bag.

8. Slide 8
Example 1:
Susan operates a pet store. She purchases Brand A dog food
at the wholesale price of $48 per bag of dog food. Susan
charges 15% markup. What will the price of the dog food be
before taxes?
100% original price + 15% markup = 115% or 1.15 as a decimal
Final Price = original price x percent
= 48 x 1.15
= 55.20
Alternative Solution
Answer:
The price of the dog food
will be $55.20 per bag.

9. Slide 9
Example 2:
Fred sells stereos. The list price for one of the stereos he sells
is $115.58. What will the total price be including 5% GST and
5% PST?
Price = wholesale price + GST + PST
GST = wholesale price x 0.05
= 115.58 x 0.05
= 5.78 (rounded to 2 decimal places)
PST = 5.78 (same as GST)
Total Price = 115.58 + 5.78 + 5.78 = 127.14
Answer:
The price of the stereo
including taxes will be
$127.14.

10. Slide 10
Example 2:
Fred sells stereos. The list price for one of the stereos he sells
is $115.58. What will the total price be including 5% GST and
5% PST?
100% original price + 5% GST + 5% PST = 110% = 1.10 (as a decimal)
Total Cost = original price x percent
= 115.58 x 1.10
= 127.14 (rounded to 2 decimal places)
Alternative Solution
Answer:
The price of the stereo
including taxes will be
$127.14.

11. Slide 11
Example 3:
Amber purchases fabric at a wholesale price for her custom
sewing business. If Amber pays $11.20/m and charges a
markup of 20%, what would the final price be including 5%
GST and 5% PST.
Price before taxes = wholesale price + markup
Markup = wholesale price x 0.2 = 2.24
Price before taxes = 11.20 + 2.24 = $13.44/m
GST = amount x 0.05
= 13.44 x 0.05
= 0.67 (rounded to 2 decimal places)
PST = 0.67 (same as GST)
Total Price after taxes = 13.44 + 0.67 + 0.67 = $14.78/m
Answer:
The total price of the fabric
including markup and
taxes will be $14.78/m

12. Slide 12
Example 3:
Amber purchases fabric at a wholesale price for her custom
sewing business. If Amber pays $11.20/m and charges a
markup of 20%, what would the final price be including 5%
GST and 5% PST.
100% original price + 20% markup = 120% = 1.20 (as a decimal)
Price before taxes = wholesale price x percent
= 11.20 x 1.20 = $13.44/m
Taxes 100% original + 5% GST + 5% PST = 110% = 1.10
Price after taxes = price with markup x percent
= 13.44 x 1.10
= 14.78 (rounded to 2 decimal places)
Alternative Solution
Answer:
The total price of the fabric including
markup and taxes will be $14.78/m