In some businesses, accountants and other managers have to simultaneously work with both markups (cost or net amount plus a percentage) and discounts or mark-downs (total or gross amount less a percentage). The five values you see can be either a user input or a calculated result. This calculator allows you to calculate three values by entering just two values.
Net Amount is either the amount to which the markup is added or it is the amount after the discount is applied.
Markup percentage is the percentage added to the net amount. $100 plus a 5.0% markup results in a Gross Amount of $105.
The Amount is $5.00, that is the difference between the Net Amount and the Gross Amount.
The Discount Percent is the percentage deducted from the Gross Amount. $105 minus a 5.0% discount equals a Net Amount of $99.75. (The Amount is $5.25).
Gross Amount is either the amount from which the discount percentage is subtracted or it is the amount after the Markup percentage is applied.
Example 1: You purchased 1,000 shares of stock for a total price of $23,554.00. Enter this in the "Gross Amount". You later sold the stock for a loss and you received only $19,054.00. Enter this in the "Net Amount. Click [Calc]. The Discount Percentage is your percentage lost i.e. 19.1%. The Markup Percentage is the percentage you have to make on a trade to make up the loss i.e. 23.6%. This, of course, assumes you are going to reinvest the entire $19,054 that was returned from the first trade.
Example 2: Sales tax is a markup percentage. Sales tax is added to the net sales amount. If you want to sell or advertise an item at a price that includes sales tax, you can't simply use the sales tax rate and use that percentage to calculate a deduction from the sale price to know the net selling price. To easily calculate the net selling price, enter the total gross price, including the tax amount that you want to sell the item for in the Gross Amount - say $495.00. Enter the sales tax rate into the Markup Percentage, say 7%. The other three inputs (Net Amount, Amount and Discount Percentage are set to 0.0). Calculate.
The Net Amount, before sales tax is $462.62 and the Amount (the sale tax in this case) is $32.38
Example 3: You can use the calculator to calculate the net purchase amount assuming a known markup. If you can sell an item for $75 and you want to make a 30% markup, what price do you have to pay for the item? Enter $75.00 for "gross amount" and 30% for the "markup percent". You have to buy at $57.69. The profit (or difference) is $17.31 and the markdown percent is 23.08%. You can use this to calculate the buy-to-cover price for a short position if you cover base on a profit goal.
Use this calculator to calculate markups and discounts (markdowns). You can solve for any unknown value. This is also a great tool for teaching how percentages work.
Businesses can use this calculator to calculate a purchase price when the selling price is known and a given mark-up is desired.
Investors can use it to calculate the buy-to-cover price for a short position when a specific profit percentage is required.
Please click on the above "Help" button for details.
You may not have thought about this before, but every calculation involving percentages has five attributes, whether you are conscious of them or not. While it is certainly straight forward to calculate a gross amount by marking up a net amount or to calculate a net amount by discounting a gross amount, this calculator will also calculate the gross amount from the net by using the discount percentage. Similarly, it will also calculate the net amount from the gross amount by using the markup percentage.
This flexibility allows you to calculate the net price, before sales tax, for example from the total sale price including taxes by using the sales tax rate as the markup percentage.
Or, you can calculate a particular percentage return on an investment or on a product that you plan to sell. You know that you will be able to sell the investment or product for "X" in the future. You know you want to make say a 20% return on the cost of the investment or product. You would enter 20% as the markup percentage and "X" as the gross amount. The calculated net amount is the amount you will have to pay for the investment or product to earn the return (markup percentage) that you desire.
Or, you know that the lowest price at which you can sell a product at is "Y". You also know that at some point you may have to offer up to a 30% discount to sell all of the product. Use this calculator and enter "Y" as the net amount and 30% as the discount percentage to calculate the gross amount. The gross amount is the before discount price you should use to be able to offer your maximum discount and not go below your lowest selling price.
If you are interested in percentages and returns on investments, then you may want to try our return on investment calculator (ROI) which is capable of calculating an annualized ROI.
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Time Value of Money