ADDITIONAL MARKUP Meaning and
Definition
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Additional markup refers to the extra amount added to the original cost price of a product or service by a retailer or distributor. It is the increase in price that enables the seller to generate profit and cover expenses such as overhead costs, utilities, and other operational expenditures.
In business, the additional markup is typically expressed as a percentage, which represents the proportionate increase in price. For example, if a retailer purchases an item for $50 and applies an additional markup of 20%, the selling price would be $60 (50 + 20% of 50). The additional markup of $10 is the profit the seller makes on the transaction.
The decision to apply an additional markup is influenced by various factors such as market demand, competition, and desired profit margins. While higher markups can lead to more significant profits, it may also result in reduced sales volume if customers perceive the price as excessively high. Therefore, businesses must strike a balance between maximizing profit and maintaining customer satisfaction.
In certain industries, such as fashion or luxury goods, an additional markup may be imposed to reflect brand value, exclusivity, or perceived quality. This allows sellers to cater to a specific target market and position their products as more desirable or prestigious.
In summary, additional markup is the amount or percentage added to the initial cost price of a product or service to facilitate profit generation and cover operational expenses.
Etymology of ADDITIONAL MARKUP
The word "additional" comes from the Latin word "additionālis", which is derived from the verb "addere" meaning "to add". "Additionālis" entered the English language around the late 15th century.
The word "markup" is a compound noun formed from "mark" and "up". "Mark" traces its roots back to the Old English word "mearcian", meaning "to mark out, note, or distinguish". On the other hand, "up" originated from the Old English word "uppan", which ultimately came from the Proto-Germanic word "upp". It refers to a direction indicating an increase, rise, or elevation.
When we combine "mark" and "up", we get the term "markup", which generally means an increase in price or value, often added to the cost of a product or service.
