If a company adds a fixed amount to cost to determine selling price, this is known as a ...?

• A. Discount
• B. Markup
• C. Marketing Mix
• D. Product Life Cycle

Answer: (B)

This is about cost-based pricing, where the selling price is set by adding a fixed amount to the cost. That fixed amount is called a markup. It can be a specific dollar amount or a percentage of cost, and it helps cover overhead and target profit. This approach differs from a discount, which lowers a price after it’s set to encourage purchases. It also isn’t about the marketing mix, which is the broader set of decisions about product, price, place, and promotion, or the product life cycle, which describes the stages a product goes through over time. So the practice of adding a fixed amount to cost to determine price is called a markup.