Unit 4
Marketing Mathematics

This unit discusses commercial discounts, markups, and markdowns. You must be certain that you understand Unit 3: “Ratios, Proportions, and Percentages,” as you will need the skills introduced there to solve the kinds of problems presented in this unit.

These problems deal with financial exchanges between manufacturers, distributors, wholesalers, and retailers. The structure governing the relationships among these actors in the marketplace is based on credit, discounts for early payments and large purchases, markups that allow the seller to cover costs and make a profit, and markdowns that may be precipitated by price wars, seasonal sales, or some other factor.

Objectives

After completing this unit, you should be able to perform the following tasks.

1. Define “trade discount,” and solve problems involving this concept.
2. Define “cash discounting,” explain methods of cash discounting, and calculate discounts using these methods.
3. Define and calculate “markup” and “markdown,” determine the rate of the markup, and find any single variable—cost, selling price, or markup—given the other two.