markup
An amount added to an agency's cost for third-party goods or services before billing the client.
Definition
Markup is the percentage or fixed amount an agency adds when it buys something on the client's behalf, for example production, printing, software or freelancers. It covers handling, risk and administration. Practices vary: some agencies pass costs through at cost, others charge a markup, and the arrangement should be written clearly. Ask what costs will be marked up, by how much, whether supplier quotes are available, and whether any discounts received are passed on. Some clients prefer a transparent flat handling fee to a percentage markup, which can be simpler to audit and avoids disputes about supplier quotes.
In a sentence
The agency added a fifteen percent markup on production costs as set out in the contract.
The client asked to see supplier quotes behind each markup.
Common mix-up
The example percentage is illustrative only; actual markups are negotiated.
