If you are an employee in the sales or retail sector, you will strive to achieve dynamic access to prices while encouraging and achieving maximum ways of selling a range of products that are out of date or do not meet sales. In the process, there may be misidentifications of items close to the dissipation phase, compliance with price changes, and quick decision-making of new prices in stores, which can aim at retailers losing out on item sales when it comes to using up the remaining stock of unsold products. Accordingly, many traders opt to lower the prices of the remaining products in stock to record new cash flows. In this case, we present you with a markdown calculator that helps you determine the retail price, the percentage of markdown, and the amount of the actual selling price compared to the original. If you have not encountered these terms before, you can learn more about using this calculator below.

What is markdown?

The term in the name of this calculator means the ratio or percentage of the price that is reduced to a new price. The markdown represents the difference between the starting and selling prices. By introducing a markdown, the trader can quickly convert the remaining goods into cash, which directly increases the business’s cash flow. Markdown can be a great way to reduce the price of an item to a lower price due to the inability to sell at the initial selling price. You can use markdowns to carry out the movement of goods that could potentially stand in the warehouse for an indefinite period. Before deciding to use a markdown, you need to consider many things in advance with strategic planning not to disrupt the entire business. Markdowns are further different from the notion of a discount offered in certain situations and a particular group of people and create a sense of specialness on the part of customers. When it comes to discounts and markdowns, both can be temporary and permanent, depending on your choice. You can also use both methods in the case of your sales strategy to maximize inventory and achieve sales goals.

How to calculate markdown percentage?

When calculating the percentage reduction, you need to take the amount related to reducing a particular commodity and divide that amount by the selling price. We can see this in one classic example:

If you have many tracksuits in stock for $45, you can lower them and sell them at a new price of $60. This difference between the first price and the recent selling price of $15 that you divide by the selling price of $60 and the percentage reduction is precisely 25%.

Markdown = \frac {Difference}{Current \; Selling \; Price} \times 100
Markdown = \frac {\$ 15}{\$ 60} \times 100
Markdown = 25 \%

Markdown calculation process

As for calculating the reduction, it takes place in a way that uses only the most relevant variables that are entered into the calculator to obtain the necessary results. You need to enter a starting or selling price and set one of the other values. As for different values, they refer to the original starting price that is decreasing, the actual cost after the markdown, the value that is one of the amounts of the markdown, and the percentage markdown in the product’s value.

How to calculate markdown price – an example

The following example can explain the procedure for introducing a reduction:

Consider that you are the owner of a flower shop and have made a purchase of 200 pieces of several different colors and types of flowers. After the past 4-5 months of business, you have concluded that customers mostly buy one particular type of flower, while stocks of other kinds of flowers have remained almost intact. Since you want to pick up some new types of flowers in your next purchase, your goal is to sell these others as soon as possible, so you’ve decided on a discount. The starting price for all types of flowers was $70, and you chose to introduce a 20% discount for the kind that sold less. The calculation process comes down to entering the data you have in the calculator, like the original selling price of $70, a percentage of 20%. The calculator will immediately display data for the amount of the markdown and the actual selling price, which are $14 and $56, respectively.