Title: Define gross margin, markup, and markdown.
Course: Fashion Marketing, Advanced (12153-II) > Section: Analyzing the Buying Process

Definition should include the following concepts:

- Gross margin is the company’s sales minus the cost of goods sold (COGS).
- Markup is the amount added to the cost to determine the selling price.
- Markdown is the amount of reduction subtracted from the selling price.

Definition should also include an explanation of how each is calculated.

Process/Skill Questions:

- Why might a retail fashion business use markdowns?
- When is a markup on an item too high? How much markup is enough?
- What mathematical skills are required in calculating gross margin? Markup? Markdown?
- Why is it important for a sales representative to be able to mentally calculate markdown and markup?
- How do profit and loss relate to markup?
- What is the relationship between price, demand, and profit?