Markup is the difference between the cost of a good or service and its selling price.[1] A markup is added onto the total cost incurred by the producer of a good or service in order to create a profit. The total cost reflects the total amount of both fixed and variable expenses to produce and distribute a product.[2] Markup can be expressed as a fixed amount or as a percentage of the total cost or selling price.[1] Retail markup is commonly calculated as the difference between wholesale price and retail price, as a percentage of wholesale. Other methods are also used.