Markdown Calculator

Retail markdowns and stacked discounts

A retail markdown reduces the selling price below the original list price. Stores use markdowns to clear seasonal inventory, respond to competition, or drive traffic during promotions. When a second clearance discount is applied on top of an initial sale price, the effective total discount is larger than either rate alone.

Enter the original price, initial markdown percentage, and any additional clearance discount. The calculator shows the final sale price, dollar savings, and effective combined discount rate. Shoppers can compare results with the discount calculator. Merchants setting list prices to absorb planned promotions should use the list price markdown calculator. Before marking down, check how fast the SKU is moving with the sell-through rate calculator.

Markdown formulas

Stacked percentage discounts multiply, not add. A 25% markdown followed by a 10% clearance cut on the reduced price does not equal a flat 35% off the original tag.

Worked example

A $120 item is marked down 25%, bringing the price to $90. A further 10% clearance discount on $90 saves $9, for a final price of $81. Total savings are $39, an effective discount of 32.5% off the original $120 list price.

Frequently asked questions