A book publisher prices its products to provide a 49% MARGIN. What RATE OF MARKUP do they use?

Question

Round to 2 decimal places. I do not know how to  solve

Answer 1

As you might have guessed, margin and rate of markup are not the same thing. Margin is determined from selling price and markup is determined from cost. But this doesn't mean you can't convert between the two.

selling price = cost / (1-margin)

selling price = cost * (1 + rate of markup).

So if we set these two equations equal

cost

---------- = cost (1 + rate of markup)

1-margin

 

Divide both sides by cost and plug in .49 for margin and you get:

1/(1-.49)=1 + rate of markup

1.96=1 + rate of markup

so rate of markup is .96

 

Hope that helps!