Markup Definition
Markup is the additional percentage, over and above the cost of a product, that is included in the selling price. The markup is a core determinant of profit margin and is calculated by dividing the difference between the selling price and the cost of the product by the cost of the product.
Markup is an important metric in business operations as it assists in determining the pricing of products. The markup percentage varies depending on the nature of the product being sold, production process, marketing strategy, competition, and sales volume. Additionally, effective management of markup enables a business to establish a balance between turnover and profitability.
In conclusion, markup is a crucial component in determining the selling price of a product, and managing it effectively is key to sustaining a solid profit margin.
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