Do most retailers and distributors in the United States markup their price based on cost or selling price?

Question

markup based on selling price =
amount added to cost / selling price
$2.00/$5.00=40%

markup based on cost =
amount added to cost / cost
$2.00/$3.00=66%

Answer 1

This gets tricky because of terminology. When someone who is knowledgeable says "We use a 50% markup" that is based on the selling price, so it matches "This is on sale at a 50% discount." When someone says "we had a 100% profit" that is based on cost. These are commonly confused.
If I buy a product for $1.00 and sell it for $2.00, my "markup" is 50% while my gross profit (before other expenses) is 100%. If I use a 50% markup and sell at a 50% discount, I am selling it at cost.
In retail, a 50% markup is common, so the cost is just doubled, the final profit after rent, wages, etc., being 8-10% or less.

Answer 2

Cost plus mark up is the selling price. Sometimes, a discount is offered to get rid of the stock, if carrying inventory is adding to the cost.

Answer 3

Both distributors and retailers mark up based on cost. A distributors mark up is usually not that much but a retailer can mark up as much as 300 % over their cost.

Answer 4

well, by definition, markup is based on cost.

Answer 5

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