Question

Compute the selling price of a sports drink that has a cost of $1.25 per item. The store needs to generate a profit of $0.50 per item.

Answer 1

There are two main different methods of pricing. One is cost based pricing and the other is the market based pricing. The cost based pricing involves adding a profit margin (Mark-up) to the costs. In the given the case, mark up is $0.50 per item and the cost is $1.25 per item. Hence the selling price of the sports drink would be $1.75 ($1.25+$0.5)