Which term refers to the markup added to the cost in order to set the first retail price?

The term that refers to the markup added to the cost in order to set the first retail price is known as Initial Markup. It represents the difference between the cost of a product and its initial selling price. This markup is crucial for retailers because it helps determine the pricing strategy for merchandise, ensuring that costs are covered and profit margins are achieved from the outset.

Initial Markup is calculated based on the retail price minus the cost price, and it plays a significant role in inventory management and sales strategy. This concept helps businesses set competitive prices while still ensuring profitability.

Other terms, while related to pricing, serve different purposes. For example, Final Markup might refer to adjustments made later in the pricing process, and Gross Margin indicates the overall profit a company retains after deducting the cost of goods sold. Base Price refers to the cost before any markups, which does not incorporate the essential addition aimed at setting the first retail price. Understanding the distinction between these terms is vital for effective pricing strategies in the retail environment.