Discount and Markup — Definition

Definition

Discount and markup problems connect cost price, marked price and selling price through percentage changes. A markup is normally measured against cost, while a discount is measured against the marked price.

Profit percentage is ordinarily measured against cost unless another base is specified. Because these bases differ, equal numerical percentages do not automatically cancel. Successive changes act on the amount produced by the preceding change, so multiplying their factors is safer than adding or subtracting rates.

A sound solution labels each price and percentage base before evaluating the final transaction.