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2 . Clip a Coupon
Coupon: a voucher entitling the
holder to a discount off a
particular product.
MARKDOWN
DISCOUNTS
3 . Consumer View
• How many of you have actually used a coupon?
• How many of you would cut coupons out?
• Can these discounts add up to anything?
• If an item is 20% off, how would you figure
this?
• If a clearance item is already 50% off and
you get an additional 20% off, is that 70%
off?
4 . Why Coupons!!
•Why Do Companies Develop them?
•To get consumers’ attention
•steer consumers toward your product instead of a competitor's
•Advertise a New Product
•Buy Customer Loyalty
•How do you feel when you get a coupon from your favorite
store
•To Get repeat Business
•To advertise you have a markdown!
•http://www.investopedia.com/financial-edge/0911/why-do-companies-print-coupons.aspx
5 . Coupons!!
Formula:
Discount Amount = Reg. Price * discount rate Net
Price = Reg. price – Discount amount
If 34% discount off $40, what is the discount amount?
Discount amount = X =
Net Price = - =
• $40 x .34 = $13.60
• $40 – 13.60 = $26.40
6 . Coupons!!
•You get a coupon in the mail for 25%
off of a pair of jeans. The jeans you
want are $85. What would your final
cost (net price) for the Jeans be?
Discount amount = X =
Net Price = - =
7 . Coupons!!
Short Formula:
• Reg. price X percentage you have to pay
Net Price = Reg. Price * (1-discount rate)
If you get a 35% discount off a $600 TV,
what is the net price paid?
Net Price = X (1-discount rate)=
Net price = $600 x (1-.35) = $390
$600 x .65 = $390 paid
8 . Coupons!!
•You get a coupon in the mail for 25%
off of your entire purchase. You buy
$195.00. What would your final net
price be?
Net Price = X (1 - ) =
9 .Markdown VS Discount
• A markdown is the term used by
the business or marketing
personnel to reduce the price of a
product to increase the sales
volume
• A discount term used by a
business or marketing personnel to
express in a percentage markdown
to the consumer to show the sale
10 . WHY MARKDOWN?
•Why do businesses mark items down?
• Sales of that item are slow
• Seasonal Item
• Item that will be discontinued
• Going out of business
• Introduction of an item
11 . Three Markdown Types
1. Temporary Markdown
– Reduction in price for a specified period of
time - will raise back to the normal price
after the sale expires
– Most familiar pricing method used to generate
sales
2. Permanent Markdown
– used to remove old products that: are
perishable and close to being out of date
(e.g., donuts);
– Remove older model to make room for new models
– products that the marketer no longer wishes to
sell
12 . Three Markdown Types
3. Seasonal
– see price reductions at the end of prime selling
season
– Products primarily sold during a particular time
of year
– Ex: clothing, gardening products, sporting
goods and holiday-items
13 .Markdown Steps Include
• Retail Price: Original selling price of the
product
• Dollar Markdown: amount off of the retail
price
• Sales Price (Net Price): final price you
pay
14 . Dollar Markdown
& Sales Price
Formula:
Dollar Markdown = Retail Price x % Markdown
Sales Price = Retail Price – Dollar Markdown
15 . Practice
• Our school store sells an MHS Sweatshirt
that retails for $60.00 and you want to
markdown the product by 25% to increase
sales. What is the amount of the mark
down?
• Dollar Markdown = x =
$60 X .25 = $15.00 Markdown
What is the Sale Price?
• Sales Price = - =
Net Sales Price = $45 net price
16 .LET’S PRACTICE
What is 25% of 100?
Dollar Markdown = x
=
Sale Price = - =
What is 15% of 50?
Dollar Markdown = x
=
Sale Price = - =
What is 50% of 75?
Dollar Markdown = x
=
Sale Price = - =
17 .More Terms….
• Net Price : The price you
actually pay for the item (after
discount)
• List Price: The price the
business pays, often expressed in
a catalog (catalog price)
18 . Alternative Method
Short Formula:
Net Price = Retail Price x (1 –
markdown %)
For Business Discount:
Net Price = List Price x (1-markdown%)
19 . Alternative Method
• You have a new item of clothing with
a 40% discount for April 3 – April 6
that sells for $75.00, what is the
net price?
– Net Price = X (1- ) =
20 .Example
• Retail price: $380 for a last years
TV Model with a discount Rate: 30%
Find the net price you pay:
Net Price = X (1- )
=
21 . PUT IT ALL TOGETHER
The winter season is about halfway complete and
we have a large quantity of MHS mittens. We
need to increase the sales of the mittens.
What would the sale price of the mittens be if
the retail price is $15 and a markdown of 25%.
Net Price = X (1- ) =
22 .Put it All Together
• The Sports Shop purchases running
shoes from wholesalers for a list
price of $119.50. Sports Shop
receives a discount of 20%. What
is the net price?
• Net Price =
23 .Figure this…
• A sports stadium sold a total of
15,125 tickets and 25% of those
tickets were children. How many
tickets were sold to children?
» Remember to round to a whole number!
• Total =
– 15,125 x .25 = 3782 tickets
24 .WORKSHEET
• Please show me that you understand
the concepts to this point.
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