Understanding Cost Price, Selling Price, and Marked Price
In competitive exams like the CAT, a strong grasp of fundamental arithmetic concepts is crucial. This module focuses on three interconnected terms: Cost Price (CP), Selling Price (SP), and Marked Price (MP). Understanding their relationships is key to solving profit, loss, and discount-related problems.
Cost Price (CP)
The Cost Price (CP) is the original price paid for an item. It's the amount a seller incurs to acquire or produce a product. This includes not just the purchase price but also any associated costs like transportation, taxes, or minor repairs.
The original price paid for an item, including all associated acquisition costs.
Selling Price (SP)
The Selling Price (SP) is the price at which an item is actually sold to the customer. The difference between the SP and the CP determines whether a profit or a loss is made.
If SP > CP, there is a Profit. If SP < CP, there is a Loss.
Marked Price (MP)
The Marked Price (MP), also known as the List Price or Tag Price, is the price displayed on the product. It is usually higher than the CP, with the intention of offering a discount to the customer and still making a profit.
The Marked Price is the initial price tag, often inflated to allow for discounts.
Sellers set a Marked Price (MP) that is typically higher than the Cost Price (CP). This allows them to offer discounts to attract customers while still aiming for a profit.
The Marked Price (MP) is the price that a seller initially sets for a product. This price is usually set above the Cost Price (CP) to accommodate potential discounts. The difference between the MP and the SP is the discount offered. The seller hopes that after offering a discount on the MP, the resulting SP will still be greater than the CP, ensuring a profit.
Relationships and Calculations
The core of these concepts lies in their interrelationships. Profit is calculated as SP - CP. Loss is calculated as CP - SP. Discounts are always calculated on the Marked Price: Discount = MP - SP. The Selling Price can then be found by SP = MP - Discount.
Visualizing the flow from Cost Price to Marked Price and finally to Selling Price helps understand profit and discount calculations. The Cost Price is the base. The profit is added to the Cost Price to potentially reach the Selling Price, or the Marked Price is set higher than the Cost Price, and a discount is subtracted to arrive at the Selling Price.
Text-based content
Library pages focus on text content
| Term | Definition | Role in Transactions |
|---|---|---|
| Cost Price (CP) | Original price paid for an item. | The base cost for the seller. |
| Selling Price (SP) | Price at which an item is sold. | Determines profit or loss. |
| Marked Price (MP) | Price displayed on the product (List Price). | Base for calculating discounts. |
Key Formulas
Understanding these formulas is essential for solving problems efficiently:
- Profit = SP - CP
- Loss = CP - SP
- Discount = MP - SP
- SP = MP - Discount
- SP = CP + Profit
- SP = CP - Loss
Profit = SP - CP = ₹250 - ₹200 = ₹50
Discount = MP - SP = ₹500 - ₹450 = ₹50
Learning Resources
A comprehensive tutorial covering the basic concepts, formulas, and solved examples for profit and loss scenarios.
This blog post breaks down the definitions and relationships between CP, SP, and MP with clear explanations relevant to competitive exams.
A video lecture explaining the core concepts of profit, loss, and discount, including how to approach related problems.
This article provides a concise list of essential formulas for profit, loss, and discount, along with their applications.
A collection of practice questions with answers to help reinforce understanding of profit and loss concepts.
A discussion forum thread that delves into the fundamental concepts of profit, loss, and discount, offering different perspectives.
BYJU'S offers a clear explanation of profit, loss, and discount, including definitions and basic calculation methods.
Provides step-by-step solutions to common profit and loss problems, illustrating the application of formulas.
This resource focuses specifically on discounts, explaining how they are calculated from the marked price.
A foundational article that clearly defines Cost Price, Selling Price, and Marked Price, essential for beginners.