How the Markdown Calculator works
A markdown is a percentage reduction applied to an item's original price to reach a new, lower sale price — the everyday math behind clearance racks, seasonal sales, and end-of-life inventory clearance. This calculator applies the standard retail markdown formula, then checks the result against unit cost so you can see whether the discounted price still turns a profit.
The formula
For an original price P and a markdown percentage m, the sale price is:
Sale Price = P × (1 − m / 100)
The markdown amount in dollars is simply P − Sale Price. If you instead know two prices and want the percentage, rearrange the formula: Markdown % = (P − Sale Price) / P × 100. To check profitability after the price cut, the calculator also compares the sale price to a unit cost you provide: Margin % = (Sale Price − Unit Cost) / Sale Price × 100.
Worked example
Take a $100 item marked down 30%, with a $45 unit cost and 50 units being cleared. The sale price is $100 × 0.70 = $70.00, a markdown of $30.00 per unit. Against the $45 cost, the margin at the new price is (70 − 45) / 70 × 100 ≈ 35.7% — still comfortably profitable. Clearing all 50 units at the marked-down price removes $1,500.00 of revenue compared with selling them at the original price.
What moves the result most
- Markdown percentage: the sale price and margin both move directly with this input — a 10-point increase in markdown removes 10% more from the original price.
- Unit cost: a higher cost basis eats into margin faster as the markdown deepens, and can push the margin negative even at modest discounts.
- Units marked down: only affects the total markdown value, not the per-unit sale price or margin — it scales the dollar impact of the discount across your inventory.
Stacking multiple markdowns
Successive markdowns compound rather than add. A 20% markdown followed by a further 10% markdown off the new price is not a 30% total reduction — it leaves 0.80 × 0.90 = 0.72 of the original price, a combined 28% markdown. To model a second markdown, run the calculator once, then use its sale price as the new original price for the next pass.
Next steps
- Record the original price, markdown percentage, and unit cost together so the sale price and margin can be recreated later.
- Before applying a markdown to a whole product line, check it against a small sample to confirm the margin still holds.
- Re-run whenever the unit cost changes — supplier price changes shift the margin even if the sale price stays the same.
Frequently Asked Questions
How is the markdown sale price calculated?
How do I find the markdown percentage from two prices?
What does the margin at sale price tell me?
Can I apply two markdowns one after another?
Common Tip Percentages
| Service | Typical Tip Range | Notes |
|---|---|---|
| Restaurant (sit-down) | 15–20% | 20%+ for exceptional service |
| Food delivery | 10–20% | Consider extra for long distances |
| Taxi / rideshare | 10–20% | More for assistance with luggage |
| Hotel housekeeping | $2–5/night | Leave daily, not just at checkout |
| Barber / hair salon | 15–20% | On pre-discount total |
| Pizza delivery | 10–15% or $3–5 minimum | Higher in bad weather |
General Household Budget Ratios (50/30/20 Rule)
| Category | % of Net Income | Examples |
|---|---|---|
| Needs | 50% | Rent, groceries, utilities, insurance |
| Wants | 30% | Dining out, entertainment, hobbies |
| Savings / Debt | 20% | Emergency fund, retirement, extra payments |
Common Measurement Conversions for Everyday Use
| Quantity | US / Imperial | Metric Equivalent |
|---|---|---|
| 1 cup | 8 fl oz | 237 mL |
| 1 pint | 16 fl oz | 473 mL |
| 1 quart | 32 fl oz | 946 mL |
| 1 gallon | 128 fl oz | 3.785 L |
| 1 lb | 16 oz | 453.6 g |
| 1 ft | 12 in | 30.48 cm |