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Many retail companies use mark up pricingââ?¬"setting price some percentage above variable cost (such as 50% above cost).

a. Why do so many firms use this?
b. Under what conditions would it be profit maximizing?
c. How should it be implemented in order to make it profitable?
d. How should set the mark up?

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The write up gives a learned discussion on mark up pricing.

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Many retail companies use mark up pricingââ?¬"setting price some percentage above variable cost (such as 50% above cost).

a. Why do so many firms use this?
Many firms use it because it is easy to implement and ensures an acceptable level of profit. This method does not entail complex calculations. The company simply sets up a policy of marking up x% above the variable cost and any store manager can implement the policy.
b. Under what conditions would it be profit maximizing? ...

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