Retailers rarely sell the product at initial market price. They always provide discounts and offers for promotional purposes. These are called reductions on initial market price. So normally, there is difference in maintained markup price with initial market price.
Calculations are as follows.
Calculation of Gross margin (in dollar): Step1: find out maintained markup in dollar.
Step2: Gross margin in dollar.
Thus, it means the firm retains $0.34 for each dollar they spend.
Calculation of Initial markup percentage:
Step1: Find out reduction percentage-
Step 2: Find initial markup percentage-
Here, the initial markup is greater than the gross margin. The reason is that initial market price is the real price of the product. Usually no merchandise sells the product at real price, but with reduction. This is the reason why gross margin is low than the initial markups.
Markup is the difference between the cost of goods and the selling price. The selling price may be termed as retail price or final selling price. Normally, retailer markup the price to gain profit for the effort they invested in the production process.
Calculation to find the markup for the product (belts) is as follows.
Step1: find Markup percentage
Step2: Find Markup
Thus, the markup for the belts is $14 per unit.
Pricing is very important in retail industry. The prices of the products play an important factor in selling the products and attracting the customers towards the seller.
The difference between bundled pricing and multiple-pricing can be described by stating that bundled pricing refers to the type of pricing in which the firms sell package of goods or services at a lower price as compared to the price if those products or services are bought separately. Bundled pricing allows the sellers to attract customers to buy more which increases the profits earned by the seller.
On the other hand, multiple-unit pricing refers to the pricing strategy wherein the products are sold at low price if they are bought in more quantities as compared to the price of the product if they are bought singly.
This way bundled pricing offers different products in a bundle or a package at discounted rate, while in multiple-unit pricing, the same product is sold in more units at the discounted rate.