Since various languages do not have their own word for percentage, the question arises as to whether or not everyone understands the method of mark-up. Mark-up can be explained by means of the “B-principle” to persons who have trouble with percentages. This method entails the following:
Since the word percentage indicates something out of a hundred, namely 100%, our decimal financial system fits in perfectly.
There are 100c in one Rand and this is taken as 100c. If a person wishes to add a profit of 25% to a cost price of R1.00, the mark-up is 25c. The 25c profit can also be written as .25 profit.
Cost price R 1.00
Mark-up/Profit R 0.25 (25%)
Selling price R 1.25
The 25% therefore means nothing more than 25c profit on each R1.00 cost price. The mark-up is simply calculated with the aid of Rand and cents. If the mark-up policy of an enterprise is 25%, it means that 25c profit is made on every R1.00 cost price. If the cost price of an item of R1.00 is multiplied by .25 the answer will be .25 or 25c.
Not all products have cost prices in multiples of R1.00. The latter method can be used on any amount. Supposing the cost price of an item is R15.60 and the mark-up policy is 25%, then the selling price will be calculated as follows:
Cost price R 15.60
Plus: Mark-up (R15.60 x .25) R 3.90
Selling price R 19.50
|In other words when 25% mark-up is referred to, it is merely replaced with its corresponding Rand value and the amount is then multiplied with the cost price of an item.|