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| Discussing Markups and Markdowns Essay

Initial price of the goods being reduced a markdown economic phenomena manifests. One may find numerous reasons why businesses markdown their products but mostly to enhance product turnover by means of |er low price appeal. A few examples of how a retailer might be the gainer when markdown a product given.

Should a perishable product come to its expiration date grocery markdown the product so that the retailer is abled to sell it out. Thus, the |ers will have been encouraged to have storage bought by the end of the physical year. In fact, this is sales which is the most familiar example of a markdown.

It must be noted, however, that a series of markdowns will not lead to simple subtraction of a certain sum of money from the primary price. The percentage calculation prove that the next markdown will result in a smaller sum taken off then addited per cents applied to a primary cost.

Example 1.

Dell Vostro laptop is $750 to be purchased for patrol cars in a police department.

Total selling price to be 3% off. This is 3%/100% = 0.03 decimal. The saving amount per device is 0.03 * 750 = $22.5. If 70 laptops bought total amount of saving will result in 70 * 22.5 = $1575.

The department saved enough money to buy 1575/750 = 2.1, or two more laptops and 1575  2 *750 = $75 saved. The selling company for its part increased product turnover by 2/70 * 100 = 2.8%

Example 2.

Suppose original price of a brand new camera to be $300 and markdown rate 25%. Fist markdown value is evident 300 * 0.25 = $75.

That is how we go from 300 to 300  75 = $225. Suppose if two 25% reductions off ( equivalent to $75 each ), cut down 75 * 2 = 150 to receive 300  150 = $150 which is 2 * 25% = 50% of the initial value.

The second curtail, in fact, needs to be derived not from 300 but from 225. Thats why the subtrahend will be a bit smaller than 75:

225 * 0.25 = 56.25. And the actual estimate will result in 300  ( 75 + 56.25 ) = $168.75 which is equivalent to ( 56.25 + 75 ) / 300 * 100% = 43.75%, not 50%.

Markup is the difference between the cost of a good or service and its selling price, in this particular case after the second price cut 168.75  150 = $18.75.

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