What does mark-up pricing refer to?

Mark-up pricing is a strategy where a specific percentage is added to the production cost of a product to establish its selling price. This percentage is intended to cover costs and generate profit. In essence, the key focus of mark-up pricing is to ensure that the price at which a product is sold is higher than the cost incurred to produce it, allowing the business to achieve its profit goals. By calculating the selling price based on the unit cost plus a predetermined margin, businesses can effectively manage their pricing strategy in relation to their overall financial objectives. This approach is common in various industries as it provides a clear and straightforward method for determining retail prices, ensuring profitability is built into the cost structure.