Markdown calculator
A markdown is a permanent reduction in an item’s selling price. This calculator finds the markdown percentage, new selling price, gross margin, and revenue impact from an original price and either a new price or a markdown %.
Add unit cost to see margin, and units expected to sell to see the total revenue and margin impact.
- Definition — Markdown
- A markdown permanently lowers the price an item sells at going forward, usually to clear inventory, respond to slow sell-through, or match competitive pricing. Unlike a temporary promotion, a markdown resets the selling price — so it directly compresses both gross margin dollars and margin rate across the units sold.
- Markdown % = (original price − new price) ÷ original price · Gross margin % = (new price − cost) ÷ new price
- Used by: Buyers, merchandise planners, pricing and trading teams
- Related: Gross margin, sell-through, weeks of supply, inventory turnover
Buyers, planners, and trading teams deciding markdown depth and timing, and anyone modelling the gross margin impact of a price cut.
Use it when a style is selling through slowly, when remaining weeks of supply are too high for the season, or when planning a clearance event.
Spreadsheets are useful when the process is small and controlled. They become risky when multiple teams need the same version of the plan, when assumptions change frequently, or when decisions must flow into POs, production, and allocation.
Enter either a new retail price or a markdown % — the calculator derives the other. New price takes priority if both are filled.
- Check the resulting gross margin % against your category’s target margin.
- Compare the markdown depth to current sell-through — a slow mover may need more, a healthy one less.
- Factor remaining weeks in the season before committing to a clearance-level markdown.
- Trace the markdown back to the original buy quantity to learn for next season.
Brush up on the math in the retail math formulas guide, see typical margin ranges on the benchmarks page, or check inventory productivity with the GMROI calculator.
Frequently asked questions
- What is a markdown?
- A markdown is a permanent reduction in the selling price of an item, usually taken to clear inventory, respond to slow sell-through, or match competitive pricing. Unlike a promotion, a markdown lowers the price the item is sold at going forward.
- How do you calculate markdown percentage?
- Markdown % = (original price − new price) ÷ original price × 100. For example, marking a $100 item down to $70 is a 30% markdown. If you know the markdown % instead, the new price = original × (1 − markdown % ÷ 100).
- How do markdowns affect gross margin?
- A markdown lowers the selling price while unit cost stays fixed, so each dollar of markdown comes straight out of gross margin. Gross margin % = (new selling price − unit cost) ÷ new selling price, so deeper markdowns compress both margin dollars and margin rate.
- How can apparel brands reduce unnecessary markdowns?
- Markdowns usually trace back to buying or planning decisions made months earlier. Tighter assortments, more accurate size curves and forecasts, and watching sell-through and weeks of supply in-season help brands flag slow movers early and act before a full clearance markdown is needed.
Your calculator result is one number. RetailNorthstar keeps the whole plan connected — line plan, OTB, assortment, buy, POs, and production.
- A markdown is a permanent reduction from the original retail price: markdown % = (original − new) ÷ original.
- Because unit cost is fixed, every dollar of markdown comes straight out of gross margin.
- Deeper markdowns compress both margin dollars and margin rate across the units sold.
- Most markdowns trace back to earlier buying decisions — tighter assortments and accurate size curves reduce them.
- RetailNorthstar connects markdown decisions back to inventory, sell-through, WSSI, margin plan, and future buying.