Welcome back to Shopping and Spending with Percentages! So far in this course, we have tackled discounts, sales tax, tips, and mental math estimation — all from the buyer's perspective. Now, in lesson five of six, we are stepping behind the counter to see how sellers set their prices. In this lesson, you will learn how to calculate markups on cost, the method businesses use to build a selling price that covers their expenses and earns a profit.

In our earlier lessons, we worked with percent decreases. A discount takes a percentage off a price, making it smaller. A markup does the opposite: it adds a percentage on top of a cost, making the price larger. If you have ever wondered why a water bottle that a store buys for $5 ends up on the shelf at $8, the answer is markup.

Here is the key idea: a store pays a cost (also called the wholesale price) to acquire an item, then increases that cost by a markup percent to arrive at the selling price the customer sees. The markup covers the store's rent, wages, and profit.

Markup is simply a percent increase applied to a cost or wholesale price to determine a selling price. Whether you use the two-step method or the one-step multiplier shortcut, the process mirrors the percent skills we have been building throughout this course. The key rule to remember: the cost is always the base.

Up next, you will put these ideas into action with hands-on practice. You will compute selling prices, fill in missing values, and even play the role of a small-business owner setting prices for a product lineup. Let's see those markup skills in action!