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.
New Price = Original Price – (Original price * markdown(%) /100)
To explain the formula a little deeper, you can think of it as follows. The new item price you are looking for will be less that the original price, so something needs to be subtracted from the original price. That number is a percent or fraction of the original price which is considered the markdown. Markdown is often written in percentages. To calculate the fraction, the markdown % needs to be multiplied by 100.
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 results, 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 mark down % 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 effects the change in total revenue and profit due to the change in demand.
For more finance calculators, click here.
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