The Concept and Types of Price in Trade

Business arithmetic uses the word 'price' for several distinct things, and keeping them apart is essential to reading a problem correctly. This section pulls the vocabulary together.

• Cost Price (CP) — what the trader pays to acquire the article, including overheads. It is the base for profit and loss.
• Marked Price (MP) / List Price — the price displayed on the article or in a catalogue, usually set above the cost price. It is the base for discount.
• Selling Price (SP) — the price the customer actually pays, i.e. the marked price after any discount. It is compared with the cost price to decide profit or loss.
• Net Price — the final amount payable after all discounts (and, where applicable, taxes) have been settled; in a plain discount problem the net price coincides with the selling price.

A further distinction traders make is between the wholesale price — the (lower) price at which goods are sold in bulk to retailers — and the retail price — the (higher) price at which the retailer sells single units to the final consumer. The gap between them is the retailer's margin, out of which the retailer covers overheads and profit.