In pricing, what term describes the amount added to the cost of a product to determine its selling price?

In pricing, what term describes the amount added to the cost of a product to determine its selling price?

• A. Cost
• B. Net price
• C. Markup
• D. Retail price

Answer: (C)

The amount added to the cost to determine what you charge the customer is called the markup. It functions as the extra above cost that covers overhead and desired profit, and the selling price is found by adding this markup to the product’s cost. Markup can be a dollar amount (e.g., cost plus $20) or expressed as a percentage of cost (e.g., 40% of cost). For clarity, if something costs 50 and the markup is 20, the selling price becomes 70. This differs from the cost (the base expense), the net price (often the price after discounts), and the retail price (the final price charged to the consumer) because markup specifically refers to the added amount used to reach the selling price.

The amount added to the cost to determine what you charge the customer is called the markup. It functions as the extra above cost that covers overhead and desired profit, and the selling price is found by adding this markup to the product’s cost. Markup can be a dollar amount (e.g., cost plus $20) or expressed as a percentage of cost (e.g., 40% of cost). For clarity, if something costs 50 and the markup is 20, the selling price becomes 70. This differs from the cost (the base expense), the net price (often the price after discounts), and the retail price (the final price charged to the consumer) because markup specifically refers to the added amount used to reach the selling price.