markup cancellation definition

A reduction of a markup. In the retail method of estimating inventory, it could mean the elimination of part or all of the additional markup. For example, if an item with a cost of $10 would normally be priced at $15, but instead is priced at $17 due to supply and demand considerations, the "additional" markup was $2. If the retailer reduces the price to $15.50 there would be a markup cancellation of $1.50.