What term refers to the additional amount a retailer adds to a product's cost to ensure profit?

The term that refers to the additional amount a retailer adds to a product's cost to ensure profit is markup. Markup is calculated as the difference between the cost price of the product and the selling price, allowing retailers to cover their costs and generate a profit. This amount is typically expressed as a percentage of the cost. For example, if a product costs $50 and the retailer applies a 20% markup, the selling price would be $60.

Understanding markup is crucial for retailers because it directly affects pricing strategies, profit margins, and overall business sustainability. It helps determine how much to charge customers while ensuring that operational expenses and desired profits are taken into account.

In contrast, margin refers to the percentage of sales revenue that represents the profit after costs are deducted; price point is the selling price of a product; and retail price is the final price at which a product is sold to consumers, which may include markup but does not solely define what markup is.