Cost & Pricing Basics
What is the total cost if materials = $10, labor = $5, packaging = $3?
18
A product costs $8 and has a 25% markup. What is the markup amount?
$2
8 x .25= 2
You made $200 and your costs were $150. What is profit?
$50
A product costs $50. You want a profit of $25 per item. What should retail price be?
$75
What is the final price paid by the customer?
Retail Price
What is The total money spent to make a product
Cost
A product costs $20 and has a 50% markup. What is the markup amount?
$10
You sell 10 items at $15 each. What is revenue?
$150
A business sells an item for $60. They made $15 profit per item. What is the cost?
$45
👉 Work: 60 – 15 = 45
The amount added to the cost to cover operating expenses and profit
Markup
If a product costs $40 and markup is $20, what is the retail price?
$60
A hoodie costs $30 with a 50% markup. What is the retail price?
$45
A product sells for $40 and costs $25. What is profit per item?
$15
Iphone Case Costs
Materials: $5
Labor: $3
Packaging: $2
Overhead: $5
The price a retailer pays to buy goods from a manufacturer usually in bulk
Wholesale Price
Why must a business price above cost?
To make a profit
A product sells for $80 and costs $50.
What is the markup %?
60%
80-50=30
30/50=0.6
0.6 x 100= 60%
You sell 20 items at $30 each. Cost per item is $20. What is total profit?
$200
👉 Work: (30–20)=10 × 20 = 200
McDonald's Meal Pricing
Scenario:
What is the retail price?
Cost = 3 + 2 + 1 + 2 = $8
Markup = 8 × 1.5 = 12
Retail = $20
What are some pricing factors?
Competition
Brand
Market Conditions
Quality
Perceived Value
What is overhead?
Ongoing business expenses (rent, utilities, etc.)
A product has a cost of $80. A business adds a 50% markup, then later puts the item on a 20% discount off the retail price.
What is the final selling price
Find Markup: 50% x 80= 40
Find Retail: 80 + 40= 120
Apply discount: 20% x 120= 24
120-24= 96
A business sells a product for $75. The cost to make each product is $45, but also has $200 in fixed costs
The business sells 40 items. What is the total profit?
Profit per item: 75 - 45= $30
Total profit in sales: 30 x 40 = $1,200
Subtract Fixed costs: 1,200-200= $1,000
A sneaker brand makes a new line. If 20 pairs are sold what is the total profit?
What is included in costing? (name 3)
Materials
Packaging
Labor
Shipping Cost
Marketing
Wholesale Price
Overhead expenses