Markdown Calculator

List Price

Markdown %

Markdown Amount

121.00

Sale Price

99.00

Marking down 220.00 by 55.00% removes 121.00, for a sale price of 99.00.

Formula

Sale Price = List Price × (1 − Markdown % ÷ 100)

A markdown is a permanent reduction in a retail item's listed price, calculated the same way as a discount but with a different purpose: clearing end-of-season or discontinued inventory rather than running a limited-time promotion.

This is the distinction that matters most: a discount is expected to end, with the price returning to normal; a markdown is not expected to be reversed.

Inventory planners track markdown rates closely, since a markdown taken too early sacrifices margin on items that might have sold at full price, while a markdown taken too late leaves inventory unsold and taking up warehouse space through an entire selling season.

Markdown Formula

Formula

Sale Price = List Price × (1 − Markdown % ÷ 100)

The markdown amount is List Price × (Markdown % ÷ 100), arithmetically identical to a discount, differing only in what it means for the price going forward.

Successive markdowns on the same unsold item compound rather than add, the same way stacked discounts do, a second 20% markdown applied after an earlier 20% markdown removes 20% of an already-reduced price, not 40% of the original list price.

How to Calculate a Markdown

Multiply the list price by the markdown percentage
Subtract the markdown amount from the list price
Update inventory records

Markdown Examples

Example 1, End-of-season clearance, $220 winter coat at 55% markdown

$99.00

Find the markdown amount 220 × 0.55 = $121.00
Subtract from the list price 220 − 121.00 = $99.00

A $220 winter coat marked down 55% at the end of the season sells for $99.00, permanently, not for a limited time.

Example 2, Discontinued product liquidation, $75 kitchen gadget at 70% markdown

$22.50

Find the markdown amount 75 × 0.70 = $52.50
Subtract from the list price 75 − 52.50 = $22.50

A discontinued kitchen gadget listed at $75 is marked down 70% to $22.50 to clear remaining stock before it's delisted entirely.

Relationship to Percentage Decrease

A markdown is percentage decrease applied to a retail list price with permanence built into the framing. The arithmetic is identical to a discount, but the list price itself is treated as having genuinely changed, rather than temporarily dipping for a sale.

Where Markdowns Show Up

End-of-Season Clearance

Seasonal apparel and goods are marked down permanently once the selling window closes, to recover as much value as possible before the next season's stock arrives.

Discontinued Product Liquidation

When a product is being phased out entirely, retailers apply a markdown to clear remaining units rather than continuing to stock an item no longer being restocked.

Damaged or Open-Box Inventory

Items with cosmetic damage or opened packaging are typically marked down permanently to reflect their reduced resale condition.

Frequently Asked Questions

Questions specific to permanent retail markdowns, as distinct from the temporary discounts covered on the discount calculator and from the accounting side of inventory valuation.

How long does a markdown typically stay in effect compared to a discount?

A markdown is meant to be permanent, the item's price stays reduced indefinitely, or until it sells. A discount is explicitly temporary, tied to a sale window that ends.

Why do retailers take a markdown instead of just discontinuing slow-moving stock at full price?

Unsold inventory ties up warehouse space and capital; a markdown converts that inventory to cash, even at reduced profit, rather than holding stock indefinitely at a price that isn't moving it.

How do multiple rounds of markdowns on the same item work?

Each subsequent markdown is typically calculated against the current, already-reduced price rather than the original list price, the same compounding effect covered on the stacked discount page, applied over separate markdown events instead of one checkout.

Does a markdown affect how an item is valued in inventory accounting?

Yes, typically, a markdown is usually recorded as a permanent reduction in the carrying value of that inventory, whereas a promotional discount at checkout doesn't change the recorded inventory value at all.

What's the difference between a markdown and clearance pricing?

Clearance pricing is a specific, usually steep form of markdown applied to items being phased out entirely, while "markdown" is the broader term covering any permanent price reduction, clearance or otherwise.

How steep do markdowns typically get on end-of-season stock?

It varies by category and how far past the selling season the stock is, but end-of-season apparel markdowns commonly range from 40% to 70% by the final clearance stage.

Can a markdown be reversed once applied?

In principle a retailer can raise a price back up, but doing so after a markdown is uncommon and can create pricing-accuracy and customer-trust issues, markdowns are generally treated as one-way.

How do retailers decide when to mark an item down?

Common triggers include a set number of weeks with no sales, the approaching end of a season, an upcoming new product replacing it, or a fixed markdown calendar built into seasonal planning.

Is a markdown applied the same way across every store in a chain?

Not always, some chains apply markdowns uniformly from a central pricing system, while others allow individual stores discretion based on local sell-through rates.

What happens to inventory that still doesn't sell after a deep markdown?

It's often liquidated in bulk to a discount reseller, donated for a tax benefit, or in some cases destroyed, depending on the product category and the retailer's policies.