A markup is the diversity between an investment’s lowest present offering price amongst broker-dealers and the value charged to the consumer for said investment. Markups happen when brokers act as principals, buying and selling securities from their own accounts at their own risk rather than getting a fee for facilitating a deal. Most dealers are brokers, and vice versa, and so the expression broker-dealer is common.
Markups also appear in retail settings, where retailers mark-up the selling price of merchandise by a certain quantity or percentage in order to earn a revenue. A pricing technique whereby a seller establishes a selling price by adding a markup to total inconsistent costs is called the variable cost-plus pricing technique.
Markup is usually used in trade to explain the disparity between buying and selling prices. This is helpful only when there is both:
Set, the same items that are substantial and enduring, and thus can be bought, sold, elated and stored, making markup meaningful AND
An important per unit buying cost to these items that can be compared in meaningful ways to per unit selling prices.