markups

(noun)

Markup is the difference between the cost of a good or service and its selling price. A markup is added on to the total cost incurred by the producer of a good or service in order to create a profit.

Related Terms

Examples of markups in the following topics:

  • Cost-Based Pricing

    • Therefore, cost-plus pricing is often considered the most rational approach in maximizing profits because it relies on arbitrary costs and arbitrary markups.
    • This appears in two forms: the first, full cost pricing, takes into consideration both variable and fixed costs and adds a % markup.
    • The other is direct cost pricing, which is variable costs plus a % markup.
    • There are several varieties, but the common thread is that one first calculates the cost of the product, then adds a proportion of it as markup.
    • This approach relies on arbitrary costs and arbitrary markups.