Use this markdown calculator to find a markdown percentage, calculate a sale price after markdown, or work backward to the original price. In retail, a markdown is a reduction from an item's original selling price—not from its cost to the retailer.
How to use the markdown calculator
Choose the value you want to find from the Calculate: menu, then enter the two known values.
| Calculation mode | What to enter | Result |
|---|---|---|
| Markdown by original price and promo price | Original price and reduced selling price, both in dollars | Markdown as a percentage of the original price |
| Promo price by original price and markdown | Original price in dollars and markdown percentage | Selling price after the reduction |
| Original price by promo price and markdown | Reduced selling price in dollars and markdown percentage | Price before the reduction |
Enter a 30% markdown as 30, not 0.30. Compare prices on the same basis: do not use a tax-inclusive original price and a tax-exclusive promo price, for example. The calculator uses only the prices and percentage you supply; it does not separately calculate taxes, shipping, or product costs.
Markdown formulas and worked examples
There are two ways to express a markdown: the dollar amount removed and the percentage reduction. The calculator's Markdown result is the percentage. To find the dollar savings, subtract the promo price from the original price.
How to calculate markdown percentage
Markdown (%) = ((Original price − Promo price) ÷ Original price) × 100
Suppose a poster originally priced at $100 is now selling for $40:
- Dollar markdown = $100 − $40 = $60.
- Markdown percentage = ($60 ÷ $100) × 100 = 60%.
The original price is the denominator because the percentage measures how much of that original price has been removed. Dividing by the promo price would measure something different.
How to calculate the sale price after markdown
Promo price = Original price × (1 − Markdown percentage ÷ 100)
Suppose a box of chocolates originally costs $20 and you apply a 40% markdown:
- Promo price = $20 × (1 − 40 ÷ 100) = $20 × 0.60 = $12.
- Dollar markdown = $20 − $12 = $8.
A 40% markdown removes 40% of the price, leaving the customer to pay 60%. The $8 is the savings, not the selling price.
How to find the original price before markdown
Original price = Promo price ÷ (1 − Markdown percentage ÷ 100)
If a dress costs $50 after a 20% markdown, its original price was:
$50 ÷ (1 − 20 ÷ 100) = $50 ÷ 0.80 = $62.50
Do not simply add 20% to $50. The markdown was calculated from the higher original price, so reversing it requires division by the remaining price fraction.
Understanding your result
A higher markdown percentage means a larger reduction relative to the original price. It does not, by itself, tell you whether an item is good value or whether the sale is profitable for the retailer.
- A 0% markdown leaves the price unchanged.
- A 100% markdown reduces a positive original price to zero.
- A negative markdown result means the promo price exceeds the original price—an increase rather than a reduction.
- A zero original price cannot be used to calculate a markdown percentage because the formula would divide by zero.
For ordinary sale pricing, use a positive original price and a markdown between 0% and 100%. When recovering the original price, the markdown must be below 100%: a zero price after a 100% reduction does not reveal what the item originally cost.
Successive markdowns are not added together
If a $100 item is marked down by 20%, then reduced by another 10% from its new price, the final price is $100 × 0.80 × 0.90 = $72. The total markdown is 28%, not 30%.
To find the combined percentage with this calculator, select the markdown mode and enter $100 as the original price and $72 as the promo price.
Using markdowns to make better pricing decisions
Retailers can use markdown calculations to compare clearance options, price seasonal stock, or check whether a planned sale price matches an advertised percentage reduction. Shoppers can use the same calculations to verify savings or reconstruct a price before a sale.
For a retail markdown campaign, work through these checks:
- Identify why stock is moving slowly. Review product visibility, descriptions, seasonality, and customer demand before assuming price is the problem.
- Compare candidate sale prices. Calculate the price at several markdown rates, then assess whether each price is attractive and commercially workable.
- Check profit per item. Compare the promo price with product cost and relevant selling expenses. This calculator does not include those costs.
- Set a review point. Track units sold, revenue, gross profit, and remaining stock over a defined period rather than judging the promotion by sales volume alone.
A markdown can reduce gross margin even if it increases sales. For example, an item that costs $10 and normally sells for $20 earns $10 in gross profit per unit. After a 40% markdown, it sells for $12 and earns only $2 before other expenses. You would need to sell five times as many units to generate the same gross profit.
Selling below cost may sometimes be a deliberate clearance decision, but the markdown percentage alone cannot establish whether that decision is worthwhile. Consider storage costs, obsolescence risk, and alternative ways to recover value.
Related pricing calculators
Markdowns and discounts both reduce a price, although retailers may use the terms differently for clearance pricing, temporary promotions, or customer-specific offers. Markup is different: it measures an increase over cost.
- Use the discount calculator to explore other discounting calculations.
- Use the margin after discount calculator to assess how a reduced selling price affects profitability.
- Use the markup calculator to measure how much a selling price exceeds cost.
- Use the margin calculator to express gross profit as a percentage of the selling price.
Add a pricing calculator to your business website
If customers need estimates for promotional orders, Calcopolis lets you build a custom product pricing calculator for your website. Let visitors estimate prices using your pricing rules before requesting a quote.