Channel markups refer to the additional costs added to a product's base price when sold through various intermediaries. These markups cover the intermediaries' costs and profit margins, resulting in higher final prices for consumers. For instance, a product sold through a retailer might include a markup to cover the retailer's operating expenses and desired profit, leading to a higher retail price compared to a direct sale from the manufacturer. Understanding and managing these markups is necessary for maintaining competitive pricing across different channels.