What is mark-up?

Mark-up refers to the difference between the cost price of a product or service and its selling price. It is usually expressed as a percentage of the cost price.

Mark-up is an important concept in business, as it is used to determine the profitability of a product or service. It is also used to set prices, as businesses need to price their products and services so that they can cover their costs and make a profit.

Mark-up can vary depending on the industry, the type of product or service being sold, and the level of competition in the market. For example, mark-ups in the retail industry tend to be higher than in the manufacturing industry.

There are different types of mark-up, such as gross mark-up, net mark-up, and contribution mark-up. Gross mark-up is the difference between the cost price and the selling price, while net mark-up takes into account any additional expenses incurred in selling the product or service. Contribution mark-up is used to determine the amount of profit that each unit of product or service contributes to the overall profit margin.

Overall, mark-up is an important concept for businesses to understand, as it can impact their profitability and pricing strategies.