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What factors may influence the level of markups?

christyjames

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5 years ago

What factors may influence the level of markups?

What factors may influence the level of markups?

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Vslice52

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#1

5 years ago

Factors affecting the level of markups include the strength of demand, the elasticity of demand, and the intensity of competition. In addition, strategic reasons also may influence the level of markups. For instance, a firm may either choose a low markup to penetrate the market and win market share from established products of its competitors, or employ a high markup if it employs a skimming strategy for a market segment in which some customers are willing to pay higher prices for the privilege of owning the product.

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