Mark-up pricing (20TH CENTURY)

Developed by Polish economist Michal Kalecki (1899-1970), mark-up pricing is an aspect of average cost pricing in which firms calculate the average cost of a product and add on a mark-up, or profit.

Research conducted in 1939 showed that the mark-up often remains constant irrespective of supply and demand conditions.

Mark-up pricing is considered an alternative to marginal cost pricing, but has been cited as a contributory factor in cost-push inflation.

Source:
M C Sawyer, The Economics of Michal Kalecki (Basingstoke, 1985);
R E Hall and C Hitch, ‘Price Theory and Business Behaviour’, Oxford Economic Papers, vol. II (May, 1939), 12-45

Markup or mark-up can refer to:

  • Markup language, a standardized set of notations used to annotate a plain-text document’s content to give information regarding the structure of the text or instructions for how it is to be displayed
  • Markup rule in economics, a formula for the ratio of a monopolist’s chosen price to its marginal cost
  • Markup (business) a term in retail business describing the increase in the price of goods to cover expenses and create a profit margin
  • Markup (legislation), the process to amend bills

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