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Mr. McGovern said he generally prices by taking a certain percentage markup, but it is fluid.
In the subclass approach, the basic and the workshare category are each given a percentage markup over cost, in order to obtain their average rate.
They examine the impact of an absolute profit constraint, a percentage markup constraint,, and a rate of return constraint as before,.
For example, if a producer charges a fixed percentage markup, then prices reflect costs of production, and changes in price correspond to changes in production, rather than changes in profit.
He agreed that the tax issue was confusing, but said some management companies were hesitating because they charge a percentage markup on power they resell to tenants, with the result that a decline in the price of power would reduce their revenues.