What is added to the cost of an item to establish its retail price?

To establish the retail price of an item, a markup is added to the cost. The markup is the amount added to the cost price to determine the selling price. It includes the desired profit margin and covers the operating expenses associated with selling the product. Essentially, the markup reflects the gross margin the seller aims to achieve after accounting for the initial cost of the item.

In the context of pricing, this is a standard practice in retail and other business sectors, as it ensures that businesses can sustain operations while also providing a return on investment. The concept of markup is crucial for setting prices that reflect both market demand and business objectives.

The other options—premium, discount, and fee—represent different pricing strategies or financial terms but do not fit the specific function of calculating the retail price directly from the cost. A premium might refer to a higher price for perceived higher value, a discount implies a reduction on the original price, and a fee typically pertains to a charge for a service rather than the pricing of a product.