As the title says - I'm struggling to find a word to describe the value that is added to the price charged for something to avoid passing on manufacturing savings to the customer.

For example if building a ship costs my company $1000 and we charge $2000 to the customer.

We then change suppliers and the ship now costs $800 to build.

However we want to still charge $2000 for the ship, so is there a name for that $200 we add to into the price to keep it the same?

Note that it doesn't have to be an actual technical financial term - just an English word that has this kind of inflation meaning

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    We could say that we 'are not passing on the cost saving to the customer'. – WS2 Nov 27 '13 at 11:53
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    Sounds like markup. – Autoresponder Nov 27 '13 at 11:55
  • Thanks @Autoresponder, yes markup does work but in this case the price already has a markup which is distinct from this extra value – Chris B Nov 27 '13 at 12:06
  • @BladorthinTheGrey Subsidizing usually goes the other way... from my understanding... the government subsidizes something to keep the price low not to keep it high. – Catija Jul 13 '16 at 15:57
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    This is called an increase in gross margin the asp (average selling price* is not changed. You’ve gone from 50% GM to 60% GM. – Jim Jul 13 '16 at 16:29

The word "markup" has been suggested in comments, with the response that "markup does work but in this case the price already has a markup which is distinct from this extra value".

This site about accounting suggests that while markup can simply mean "the difference between cost and the selling price" (ie. the difference between $1000 and $2000 in your example), there is a further meaning in retail of "the 'additional' markup from the original selling price [because of things like stock shortages and high demand]" (ie. the $200 you add to the price because of your supplier change).

So I'd suggested using the phrase "additional markup".

  • I believe this is an incorrect interpretation of the term. The accounting article implies that an increase in price is involved: 'For example, an item with a cost of $10 might normally be priced at $15. However, because of the shortage of this item and because of high demand, the retailer sets a selling price of $17. Sometimes markup means the $7, but sometimes it means the additional markup of $2.' Both are add-ons, 'markups', not cuts in production costs. – Edwin Ashworth Jul 13 '16 at 16:49

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