What does the term "markup" specifically refer to in the context of retail?

In the context of retail, "markup" specifically refers to the amount added to the cost price of goods to determine their selling price. This markup is a critical element in pricing strategy as it allows retailers to cover their costs and generate profit. By calculating the cost of the product and then adding a specific amount, retailers ensure they can operate sustainably while offering products to consumers at a price point that reflects value.

Understanding markup is essential since it not only impacts profitability but also plays a role in pricing competition and customer perception. Retailers must carefully consider their markup in relation to market demand, competitors’ pricing, and overall business strategy.

The other options, while related to retail and pricing, do not directly define markup. The percentage of total sales revenue pertains more to overall business performance rather than specific product pricing. Total expense of goods sold refers to the aggregate cost incurred from selling products, which is broader than just the markup on individual items. The percentage of profit from sales speaks to profitability but does not detail the mechanism of calculating the selling price from cost, which is the essence of markup.