DOE Response to Stakeholder Questions Regarding Mark-up Analysis at the Commercial Ice Maker 

Public Meeting on April 14, 2014

A number of stakeholders raised questions during the public meeting as to how DOE created its markups and asked for clarification so that they can better analyze DOE’s proposed standards. One 

individual, Scott DeShetler of Ice-O-Matic, submitted written questions to DOE on May 7, 2014. These 

questions, and DOE’s responses to those questions, follow.

1. Markup is typically stated in fixed (dollar) terms and as a percent. Can you explain what 1.36, 

1.45, etc. refers to. Is that a percent or a multiplier?

Example: if a wholesaler buys a machine for $100 is this model suggesting he/she is reselling it 

at $136?

Response: Your example is correct. It is a multiplier. The 1.36 multiplier is applied to the 

manufacturer selling price from the engineering analysis and is the same as a 36% 

markup. Sometimes we refer to these as markup factors to better imply that they are 

multipliers.

2. Is the table sequential? Example: from the first example if the wholesaler is selling the machine 

for $136 to the dealer is the dealer selling it for $272 ($136x2.00)

Response: The data in columns shown on the slide are used independently for each distribution 

chain and are independently applied to the manufacturer selling price. In this example 

provided, if the original manufacturer selling price was $100, the price after passing through the 

dealer would be $200 ($100 x 2.00). The average dealer markup of 2.00 shown in the slides 

includes the wholesaler markup (i.e., the additional markup for the dealer alone accounts for 

the difference between 1.36 and 2.00). 

3. How is the Overall Weighted Average Markup calculated? Example: With an initial cost of $100 

to the value chain and a final price of $272 from the previous example the value chain markup is 

1.72 vs 1.76 ($272-$100/$100)

Response: The overall weighted average markup is a weighted average of the 38% of units 

assumed to be delivered through the wholesaler chain and the 62% of units assumed to be 

delivered through the dealer chain. (0.38 x 1.36) + (0.62 x 2.0) = 1.76 (rounded)

Using the original $100 manufacturer selling price, the overall weighted average price after 

markup would be $176.

4. How are you making the calculation from pure markup to markup with sales tax? It looks like the 

tax rate is different for the baseline versus the incremental. What are the assumptions as to tax 

rates?

Response: The sales tax for all base and incremental markups shown on the presentation slide 

is 7.15%. This is a population-weighted average of the state sales tax rates obtained from an online source. The source for the sales tax rates is cited in TSD Chapter 6, along with the date the 

source was last accessed. Note that the values within the LCC model are not rounded to 2 

decimal places as they were in the slide, and thus you may find a small rounding error if doing 

hand calculations (e.g., applying the sales tax multiplier to the rounded 1.36 wholesaler markup 

shown in the slide would seem to be 1.36 * 1.0715 = 1.46, but the unrounded value of 1.3569 * 

1.0715 = 1.454 rounded to three decimals or shown on the slides as 1.45).