Lesson 2: Pricing - Calculating the Percent of Increase or Decrease

   Constructing Knowledge

It is also possible to determine the percent increase (markup percent) or percent decrease (markdown percent) when both the original and final amounts are known.

To do this, you will need to apply the steps used in previous sections in reverse. The new order for the steps is:

Step 1: Find the increase or decrease amount using subtraction.

Step 2: Use either the formula for percent increase or percent decrease.

\(\text{percent increase}=\frac{\text{amount of increase}}{\text{original amount}}\times \text{100%}\)

or

\(\text{percent decrease}=\frac{\text{amount of decrease}}{\text{original amount}}\times \text{100%}\) 

   Multimedia

A video describing calculating the percentage rate of price increase or decrease is provided.


EXAMPLE 1

A store owner purchased jeans for $40 a pair from a manufacturer. The owner priced the jeans for $90 a pair. What is the percent markup on the jeans?

Solution


Step 1: Calculate the markup in dollars.

\(\begin{align} \text{markup amount}&=\text{store price} - \text{manufacturer} \\ \\ &=\$90 - \$40 \\ \\ &=\$50 \\ \end{align}\)

Step 2: Calculate the percent increase (percent markup).

\(\begin{align} \text{percent increase}&=\frac{\text{amount of increase}}{\text{original amount}}\times \text{100%} \\ \\ &=\frac{50}{40}\times \text{100%} \\ \\ &=\text{125%} \\ \end{align}\)

The jeans were marked up 125%.

EXAMPLE 2

Alice bought a pair of winter boots on sale for $108.00. The original price of the boots was $180.00. What was the sale percentage?

Solution


Step 1: Calculate the markdown, in dollars.

\(\begin{align} \text{markdown amount}&=\text{original price}- \text{sale price} \\ \\ &=\$180 - \$108 \\ \\ &=\$72 \\ \end{align}\)

Step 2: Calculate the percent markdown (sale).

\(\begin{align} \text{percent decrease}&=\frac{\text{amount of decrease}}{\text{original amount}}\times \text{100%} \\ \\ &=\frac{72}{180}\times \text{100%} \\ \\ &=\text{40%} \\ \end{align}\)

The boots were 40% off the original price.


Now, it is your turn! Complete the questions in your Chapter 2, Lesson 2 Practice Makes Perfect that refer to Calculating the Percent Rate of Increase or Decrease.



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