markup

n.

1. A raise in the price of an item for sale.
2. An amount added to a cost price in calculating a selling price, especially an amount that takes into account overhead and profit.
3. A session of a U.S. congressional committee at which a legislative bill is put into final form.
4. 1. The collection of detailed stylistic instructions written on a manuscript that is to be typeset.
   2. Computer Science. The collection of tags that describe the specifications of an electronic document, as for formatting.

The difference between an investment's lowest current offering price among dealers and the higher price a dealer charges a customer. Markups occur when dealers act as principals (buying and selling securities from their own accounts, at their own risk), as opposed to brokers (receiving a fee for facilitating a transaction).

Investopedia Says:
Certain securities are available for purchase by retail investors from dealers who sell the securities directly from their own accounts. The dealer's only compensation for the sale comes in the form of the markup, the difference between the price the security was purchased at and the price the dealer charges to the retail investor. The dealer assumes some risk by acting in this capacity, as the market price of the security in his or her inventory could drop before he/she is able to sell to investors.

Note that most dealers are also brokers, and vice versa, so the term broker-dealer is common.

Related Links:
How do you find the right broker for your investment needs? Start by reading our broker tutorial. Brokers and Online Trading
Find out the various ways in which a broker can fill an order, which can affect costs. Understanding Order Execution
Smart investors don't give away more money than necessary in commissions and fees. Find out how to save. Don't Let Brokerage Fees Undermine Your Returns

Marketing:

1. see gross profit.

2. Determination of a retail selling price, based on some percentage increase in the wholesale cost; also called margin. For example, a 20% markup on an item wholesaling at $100 would be $20, resulting in a retail selling price of $120. Typical markups are 28% for cameras, 41% for dresses, 46% for costume jewelry, and so forth. The size of retail markups tends to vary inversely with the wholesale cost and with turnover (the rate at which a quantity is sold). See also markdown.

Printing: written instructions for the typesetter on copy-for instance, underlining words to indicate they should be set in italics.

1. Increase on the original selling price. It is associated primarily with the pricing of items for sale in a retail or wholesale environment. Markup cancellation is a reduction on the price of merchandise that has been marked up on the original retail price. See also Markdown.

2. Amount added to the cost of an item to arrive at a selling price. Markup may be expressed as a percentage of cost or in dollars. For example, if an item costing $20 has a profit markup on cost of 30%, the selling price will be $26 ($20 + $6).

3. Dealer markups in securities trading.

Markup is the amount that a seller of goods or services charges over and above the total cost of delivering its product or service in order to make a desired profit. For example, if the total cost of a manufacturer's product is $20, but its selling price is $29, then the extra $9 is understood to be the "markup." Markup is utilized by wholesalers, retailers, and manufacturers alike.

For entrepreneurs in the process of starting a business, establishing markup is one of the most important parts of pricing strategy. Markups must be sizable enough to cover all anticipated business expenses and reductions (markdowns, stock shortages, employee and customer discounts) and still provide the business with a good profit. The informed small business owner, then, is far more likely to arrive at a good markup price than the business owner who has a flawed understanding of the company's likely sales, its total operating expenses—including material, labor, and overhead costs—and its place in larger economic trends.

Entrepreneurs should also recognize that a flat markup percentage should not be blindly stamped on all of the company's products or services regardless of the frequency with which customers purchase those goods or services. As the Small Business Administration noted in its brochure Pricing Your Products, small business owners "should seriously consider different markup figures when some lines have very different characteristics. For instance, a clothing retailer might logically have different initial markup figures for suits, shirts, pants, and accessories. [The small business owner] may want those items with the highest turnover rates to carry the lowest initial markup."

Indeed, a small business may be able to realize a hefty profit even when it attaches a considerably smaller markup to one line of products, provided that the sales volume for that product line is high. For example, if company A and company B are selling the same $5 product, but company A insists on attaching a $4 markup on the product while company B limits itself to a $2 markup, the disparity in retail price may allow company B to register sales three or four times greater than the sales posted by company A. Company B thus realizes greater profits from the product than company A, even though the latter business had a higher markup.

MARKUPS IN SPECIFIC INDUSTRIES. Markups vary enormously from industry to industry. In some industries, the markup is only a small percentage of the total cost of the product or service. Companies in other industries, however, are able to attach a far higher markup. Small appliance manufacturers can sometimes assign markups of 30 percent or more, while clothing is often marked up by as much as 100 percent. Even within industries, markups can vary widely. The automotive industry, for example, is usually limited to a 5-10 percent markup on new cars, but it realizes a far higher profit in the hugely popular sports utility vehicle market, where markups of 25 percent or more are not uncommon.

Further Reading:

Aguirregabiria, Victor. "The Dynamics of Markups and Inventories in Retailing Firms." Review of Economic Studies. April 1999.

Berry, Leonard L., and Manjit S. Yadav. "Capture and Communicate Value in the Pricing of Services." Sloan Management Review. Summer 1996.

Pricing Your Products. Small Business Administration, n.a.

Rugledge, John. "Pricing for Growth." Forbes. October 7,1996.

Service Corps of Retired Executives (SCORE), Chapter 225. Handbook for Small Business. Small Business Administration, 1989.

Sinanoglu, Elif. "Want a Markdown? Learn the Markup." Money. February 1996.

See also: Pricing

This entry is from Wikipedia, the leading user-contributed encyclopedia. It may not have been reviewed by professional editors (see full disclaimer)

Dansk (Danish)
n. - avance, bruttofortjeneste, prisforhøjelse

Nederlands (Dutch)
prijsverhoging, winstmarge, zitting van Congres waar wet wordt geformuleerd (V.S.), prijs verhogen

Français (French)
n. - marge, augmentation

Deutsch (German)
n. - Preiserhöhung, Handelsspanne

Ελληνική (Greek)
n. - (οικον.) σταθερό ποσοστό κέρδους

Italiano (Italian)
aumento (per es. del margine fra acquisto e vendita)

Português (Portuguese)
n. - preço final (m), correção em texto (f)

Русский (Russian)
повышение цен, розничная цена, надбавка

Español (Spanish)
n. - margen de beneficio, aumento, subida

Svenska (Swedish)
n. - prishöjning, pålägg

中文（简体）(Chinese (Simplified))
涨价, 涨价幅度

中文（繁體）(Chinese (Traditional))
n. - 漲價, 漲價幅度

한국어 (Korean)
n. - 가격 올리기, 제품에 대한 이윤

日本語 (Japanese)
n. - 値上げ, 値上げ幅, 法案の最終的煮詰め

العربيه (Arabic)
‏(الاسم) رفع للسعر, الربح‏

עברית (Hebrew)
n. - ‮עלייה, ייקור‬

If you are unable to view some languages clearly, click here.

To select your translation preferences click here.