List Price & Markdown Calculator

Calculate sale prices, discounts, and profit margins with ease

Tip: Use this tool to plan profitable markdown strategies or calculate savings during sales.

Calculation Mode

Original Price ($)

Markdown Percentage (%)

Pricing Strategy Fundamentals

Understanding Markdowns

A markdown is a reduction from the original selling price to stimulate sales, clear inventory, or remain competitive. Effective markdown strategies balance profitability with sales velocity. Retailers typically plan markdowns in advance, with common triggers being seasonal changes or slow-moving inventory.

Initial Markup

The difference between cost and original price. Formula: (Original Price - Cost) / Cost

Maintained Markup

The actual profit after markdowns. Formula: (Sale Price - Cost) / Sale Price

Markdown Timing Strategies

Strategy	When to Use	Typical Markdown
Early Bird	New season launch	10-15%
Mid-Season	Slow movers	25-30%
End-of-Season	Clearance	50-70%

Markdown Psychology & Consumer Behavior

Price Anchoring

Showing the original price next to the sale price creates a reference point that makes the discount appear more significant. This "anchor" effect can increase conversion rates by 30-50%.

Threshold Discounts

Discounts just below round numbers (e.g., 19.99% instead of 20%) are perceived as better deals. The left-digit effect makes 19% seem significantly less than 20% to consumers.

"The most effective markdowns create a sense of urgency. Limited-time offers with clear deadlines (e.g., '72-Hour Sale') typically outperform open-ended promotions by 2-3x in conversion rates."

Frequently Asked Questions

What's the difference between markdown and markup?

Markdown is a reduction from the original selling price (used in retail), while markup is the amount added to the cost price to determine the selling price. Markdowns decrease prices, markups increase them from the wholesale cost.

How do I determine the optimal markdown percentage?

Consider your cost structure, inventory age, seasonality, and competition. A common approach is the "50-30-20" rule: Start with 20%, move to 30% if needed, then 50% for clearance. Always maintain at least a 10-15% profit margin after markdowns.

Is it better to markdown prices or run a BOGO (Buy One Get One) promotion?

BOGO works better for increasing basket size, while markdowns drive faster turnover. For slow-moving inventory, markdowns are often more effective. For complementary products, BOGO can increase overall sales volume.

How often should retailers review their markdown strategy?

Review markdown performance weekly during peak seasons and bi-weekly otherwise. Analyze sell-through rates - if items aren't moving after 2 weeks at a given markdown, consider increasing the discount.

What's the impact of markdowns on brand perception?

Frequent deep discounts can devalue your brand. Luxury brands typically limit markdowns to private sales, while value brands can use them more aggressively. Balance sales goals with long-term brand equity by planning strategic markdown periods.