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Explanation:
Markup is the name given to the difference between a cost price and a selling price:
cost price + markup = selling price
Markdown is a name given to the difference between a list price or tag price and the actual selling price.
list price - markdown = selling price
Markup and markdown are <em>actual currency amounts</em>. Often, sellers relate them to the cost price or the list price using percentages. That is, the percentage markup can be figured as ...
percent markup = (markup)/(cost price) × 100%
Similarly, the markdown may be expressed as a percentage of the selling price:
percent markdown = (markdown)/(selling price) × 100%
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<em>Additional comments</em>
These representations as percentages are often used because a seller is usually interested in having a specific percentage return on money invested. By making the markup a specific percentage of the cost price, that return can be ensured.
Markdown percentages are often important to a buyer. They look for sales that offer a large percentage discount (markdown), sometimes not paying so much attention to the list price.
