Use this markdown calculator to determine the new list price of your product. Enter the initial price and markdown % to calculate the new price.
The markdown formula is very similar to the formula for markup. The list price of an item can be calculated as follows.
NP = OP – (OP*MD/100)
- Where NP is the new price
- OP is the original price
- MD is the markdown %
Markdown is defined as a ratio or percentage of a price that is reduced to a new lower price.
How to calculate Markdown
Let’s take a look at an example of how to use markdown in the real world.
Let’s assume you have a product that currently sells for $100.00. This product has not been selling as well as hoped for. As a result, you are looking to decrease the price to increase sales. To do this, you are going to apply a markdown to that item. After some math, you’ve determined that a 5% decrease is a good place to start.
Next, you need to plug in the original price, and markdown % into the formula, or just simply use the calculator. This should yield a new price of $95.00. That means the total decrease due to the markdown was $5.00.
To determine if this decrease will yield an increase in profit, you should visit our price elasticity of demand calculator. This is an evaluation of how a change in price affects the change in total revenue and profit due to the change in demand.
Markdown, is the opposite of markup. In other words, it’s the percentage reduction in the price of a good or service.
For more finance calculators, click here.