Markdown Calculator

What Is a Retail Markdown?

A retail markdown is a reduction in the selling price of merchandise to stimulate sales, clear out end-of-season inventory, or respond to competitor pricing. Calculated as a percentage of the original retail price, markdowns help retailers maintain cash flow while offering shoppers significant savings.

Retail Markdown Formula

The basic formula for calculating a single markdown is:

$$\text{Markdown Amount} = \text{Original Price} \times \left( \frac{\text{Markdown \%}}{100} \right)$$

$$\text{Final Sale Price} = \text{Original Price} - \text{Markdown Amount}$$

Handling Stacked / Multiple Markdowns

When retailers offer additional discounts (e.g. "Take an extra 20% off clearance prices"), the secondary markdown applies to the already-reduced price, not the original price:

$$\text{Effective Discount Rate \%} = \left[ 1 - (1 - d_1) \times (1 - d_2) \right] \times 100$$