Question

The vendor tells you that the first two discounts are fixed but the 9% is negotiable. what is the minimum trade discount you should request in order to keystone the markup?

Answer 1

To keystone the markup, the minimum trade discount you should request is $71 or 35.5% of the selling price after the first two fixed discounts.

Step-by-step explanation:

To determine the minimum trade discount needed to keystone the markup, we first need to understand what keystone pricing is. Keystone pricing is a method where the selling price of a product is set at double the cost price. So, if the cost price is $x, the selling price would be $2x.

In this case, the vendor has mentioned that the first two discounts are fixed, meaning they are not negotiable. Therefore, to keystone the markup, we need to ensure that the third discount, which is 9%, is enough to cover the markup.

Let's assume the cost price of the product is $100. To keystone the markup, the selling price should be $200. The first two fixed discounts should be subtracted from the selling price, and the remaining amount should be equal to or higher than the cost price.

• Discount 1: Let's assume it is 10%. The selling price after this discount would be $180.
• Discount 2: Let's assume it is 5%. The selling price after this discount would be $171.
• Discount 3: This discount is negotiable. To determine the minimum discount needed, we subtract the cost price from the selling price after the first two discounts: $171 - $100 = $71.

To keystone the markup, the minimum trade discount that should be requested is $71, which is equivalent to 35.5% of the selling price after the first two discounts.