Pricing and Payment Methods
This domain covers pricing methods, discounts, taxes and payment choices at retail. The exam tests markup, margin and correct tender handling.
Core rules and concepts
- Cost-plus pricing adds a markup to cost. Markup on cost = (selling price - cost) ÷ cost.
- Margin on selling price = (selling price - cost) ÷ selling price.
- MRP is the maximum retail price; discounts reduce the amount charged but must follow policy and law.
- GST is a tax collected on behalf of government, not sales revenue.
- Payment methods include cash, cards, UPI, wallets, bank transfer, COD and EMI/BNPL where offered; each has security and reconciliation implications.
Worked example
Cost is Rs 400 and the store applies a 25% markup on cost. Selling price = 400 + (25% of 400) = Rs 500. Margin on selling price = (500 - 400) ÷ 500 = 20%. Reasoning: markup is based on cost, margin on selling price, so the same transaction gives different percentages. Confusing the two overstates margin and can lead to bad pricing.
Traps that cost marks
- Treating markup and margin as the same percentage.
- Counting GST as shop revenue.
- Storing a customer’s PIN or card details.
- Giving an unauthorised discount.
Key points
- Markup uses cost as the base.
- Margin uses selling price as the base.
- GST is collected, not earned as revenue.
- Payment records must reconcile to the bill.
- Never store PINs or sensitive card data.