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Marking up Merchandise

Compare and contrast the three methods of marking up merchandise (based on cost, based on selling price, and marking up perishables).

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Please see response attached (also presented below), as well as one excellent resource. I hope this helps and take care.

RESPONSE:

1. Compare and contrast the three methods of marking up merchandise (based on cost, based on
selling price, and marking up perishables).

The price of items should allow for sufficient gross profit to cover overhead expenses and a reasonable net profit. You can choose and understand one or two pricing methods -- mark-up (based on cost) or margin (based on selling price). Traditionally, retail clothing, for example, has had mark-ups of approximately 43 to 67%, comparable to margins of 30 to 40%. http://www.cbsc.org/servlet/ContentServer?cid=1102419629706&pagename=CBSC_SK%2Fdisplay&lang=en&c=GuideHowto

Let's take a closer look:

1. Markup Pricing: BASED ON COST

This is probably the most common method of computing the price of an item. It is very similar to the cost-plus pricing but is most commonly used when you purchase a product to re-sell to the consumer. In this scenario you have a fixed price. The cost of the sofa and the shipping.

If the cost of your product is $100.00 and your selling price is $150.00 then your ...

Solution Summary

This solution compares and contrasts the three methods of marking up merchandise (based on cost, based on selling price, and marking up perishables). Supplemented with information on pricing and mark ups.

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