How this calculator works
A markdown compares a retailer regular selling price with its reduced selling price. Its rate uses regular price as the denominator. Choose two prices, a regular price and rate, a sale price and rate, or a regular price and dollar reduction. When both prices are zero, the amount is zero and the rate is undefined, so the rate is omitted. Cost and operating expenses do not enter this reduction calculation.
Formula
Markdown amount = regular selling price - sale price. Markdown rate = markdown amount / regular selling price. Sale price = regular price x (1 - rate).
Worked example
Reducing a regular $100 item to $80 is a $20 markdown and a 20% markdown rate. A $60 regular price with a $15 markdown sells for $45 at a 25% reduction.
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Frequently asked questions
Is markdown a loss?
Markdown measures the reduction from regular price. A sale can remain profitable if the reduced price still covers its costs.
Can I use a higher sale price?
A higher selling price is a price increase. This markdown model accepts reductions from 0% to 100%.
What is the denominator?
Use regular selling price when finding the markdown rate. Dividing the same amount by cost or sale price answers a different question.