Why do many department stores seek a markup of about 30 percent when some discount houses operate on a 20 percent markup?  

1 Answer | Add Yours

pohnpei397's profile pic

pohnpei397 | College Teacher | (Level 3) Distinguished Educator

Posted on

The most likely reason for this is that department stores see themselves as more prestigious than discount houses.  For this reason, they both want to and can charge higher prices.  The department stores want to charge higher prices so they can make more profit.  They also want to charge higher prices because many customers equate a higher price with a more better value product. They are able to charge these prices because they have a more desirable good.  Customers feel that it is acceptable to pay a higher price at a department store because they feel that they are getting a superior product.

We’ve answered 320,050 questions. We can answer yours, too.

Ask a question