How to use this calculator
- Enter or choose original price.
- Enter or choose markdown.
- Enter or choose unit cost.
- Enter or choose units you expected to sell at full price.
- The sale price updates as you type. Use Copy result or Share to keep it.
Method
Sale price = Price × (1 − Markdown%); Margin = (Price − Cost) ÷ Price; Units to match = Units × (Price − Cost) ÷ (Sale price − Cost)
- Price
- the original selling price
- Cost
- unit cost
- Units
- the volume you expected at full price
Worked example
- Sale price = 80 × (1 − 25%) = 60; markdown = 20 per unit, 1,000 on 50 units.
- Margin falls from (80 − 36) ÷ 80 = 55% to (60 − 36) ÷ 60 = 40%.
- Same gross profit needs 50 × 44 ÷ 24 = 91.67, so 92 units.
A 25% markdown on an $80 item costing $36 drops margin from 55% to 40%; you need to sell 92 units instead of 50 to earn the same gross profit.
What the result means
If the extra volume is unrealistic, the markdown loses money compared with full price. For ageing stock the real comparison may be with not selling at all, so the cost to clear also matters.
Assumptions and limits
- Unit cost does not change with volume.
- Ignores the effect on sales of other items and on future full-price sales.
Questions
Is markdown the same as discount?
In retail, a markdown is a permanent price reduction on stock (often to clear it); a discount is usually temporary or customer-specific. The arithmetic is the same.
How is markdown percentage reported?
Retailers often track total markdown value as a percentage of net sales to monitor how much margin promotions and clearance cost.