How to Calculate Markup, Discount, and Tax

How to Calculate Markup, Discount, and Tax?

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Markup

A markup increases the cost to make a selling price. Use \(\text{selling price} = \text{cost}(1+\text{markup rate})\). A \(25\%\) markup means multiply by \(1.25\).

Discount

A discount lowers the original price. Use \(\text{sale price} = \text{original price}(1-\text{discount rate})\). A \(20\%\) discount means multiply by \(0.80\).

Sales Tax

Sales tax is added after the taxable price is found. Use \(\text{total} = \text{price}(1+\text{tax rate})\). For example, an \(8\%\) tax means multiply by \(1.08\).

Multi-Step Purchases

Markup, Discount, and Tax

Think of this lesson as more than a rule to memorize. Markup, Discount, and Tax is about parts, wholes, rates, discounts, tax, and percent change. A strong student does not rush to the first formula on the page; they pause, identify the structure of the problem, and then choose the tool that matches that structure. That pause is what prevents most mistakes.

Percent means ?per 100,? so \(p\%\) is \(\frac{p}{100}\). Most percent problems come from part = percent \(\times\) whole.

Here is the teacher way to approach the topic. First, read the problem slowly and underline the information that is actually given. Next, name the target: are you finding a value, simplifying an expression, comparing two quantities, solving for a variable, or interpreting a graph? Once the target is clear, the calculation becomes much less mysterious because every step has a job.

• Read what is given and what is being asked.
• Choose the rule that connects them.
• Substitute carefully and simplify in small steps.
• Check the final answer against the original question.

A helpful habit is to say what each number represents before using it. For example, if a number is a denominator, a radius, a slope, a common difference, or a coefficient, it should not be treated like an ordinary loose number. Its role tells you where it belongs in the formula. This is especially important on ACT-style questions because many wrong answer choices come from using the right numbers in the wrong places.

Another good habit is to keep the work organized vertically. Write one clean line for substitution, one line for simplifying, and one line for the final answer. If the problem has units, keep the units attached. If the problem has signs, exponents, or parentheses, copy them carefully from one line to the next. Most errors in this topic are not caused by a hard idea; they are caused by dropping a negative sign, combining unlike terms, using the wrong denominator, or skipping a check.

When you finish, ask a quick reasonableness question. Should the answer be positive or negative? Should it be larger or smaller than the original number? Does it fit the graph, table, shape, or equation? Can you plug it back into the original problem? This final check turns the lesson from a procedure into understanding.

On a test, the goal is not to write the longest solution. The goal is to write enough clear work that you can see the structure, avoid traps, and recover quickly if one line goes wrong. Practice the examples below with that mindset: identify the type of problem, choose the matching rule, show the substitution, simplify carefully, and check the answer before moving on.

Apply changes in the order they happen. If an item is discounted and then taxed, find the sale price first, then apply the tax to that sale price.

Free printable Worksheets

Quiz 1