Markdown Calculator - Price Reductions and Margins

A markdown is the reduction from an item's original selling price to its current sale price. Retailers use markdowns to clear seasonal merchandise, respond to competition, move slow inventory, or promote a limited-time event. This calculator reports both the dollar amount removed from the price and the markdown percentage, so it is useful whether you plan in dollars or compare discounts across products with different ticket prices. The dollar markdown formula is original price minus sale price. The percentage formula divides that difference by the original price and multiplies by 100. A jacket reduced from $120 to $84 therefore has a $36 markdown and a 30 percent markdown rate. The percentage is always based on the original price, not on the sale price. That distinction matters when comparing a retailer's promotion with a supplier discount or with a profit-margin figure. Adding product cost turns a pricing check into a profitability check. Profit is sale price minus cost, while profit margin divides profit by sale price. In the jacket example, a $60 cost leaves $24 of gross profit at the $84 sale price, or a 28.57 percent margin. The discount may be worthwhile because it releases cash and inventory space, but a price below cost creates a negative profit unless another business objective justifies it. Markdown and markup describe different reference points. Markdown measures a cut from a selling price. Markup measures the amount added to cost. Margin measures profit as a share of revenue. A 30 percent markdown does not imply a 30 percent margin reduction, because each percentage uses a different denominator. Reviewing all three figures helps buyers, store managers, and online sellers avoid making decisions from a discount headline alone. Use realistic landed cost when evaluating a promotion. Include packaging, shipping, marketplace fees, payment processing, and any variable labor that rises with a sale. Fixed overhead is often examined separately, but it still matters when deciding whether an ongoing price can sustain the business. The calculator provides a clear first-pass comparison; your accounting policy and taxes determine the final operating result.