Choose what you want to calculate
$
Please enter the list price.
Original retail price before markdown
%
Enter a markdown between 0 and 100%.
Percentage reduction from the list price
$
Enter to see gross profit after markdown
Sale Price
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Sources & Methodology
Markdown formulas verified against retail accounting standards from the National Retail Federation (NRF) and Accounting Tools financial reference guides.
National Retail Federation — Retail Glossary
Industry-standard definitions for markdown, markup, list price, and sale price used in retail accounting and pricing strategy
AccountingTools — Markdown Definition
Accounting treatment for retail markdowns including markdown on retail vs markdown on cost distinction used in this calculator
Methodology: Forward: Sale Price = List Price × (1 − Markdown% ÷ 100). Markdown Amount = List Price − Sale Price. Reverse: List Price = Sale Price ÷ (1 − Markdown% ÷ 100). Find %: Markdown% = ((List − Sale) ÷ List) × 100. Gross Profit = Sale Price − Cost Price. Gross Margin = (Gross Profit ÷ Sale Price) × 100.
⏱ Last reviewed: March 2026
How to Calculate List Price Markdown
A markdown is the reduction from the original list (retail) price to a lower sale price. Whether you are a retailer planning a promotional event, a buyer trying to verify savings, or an accountant tracking inventory value, the markdown formula is one of the most frequently used calculations in retail and commerce.
The Formulas
Sale Price = List Price × (1 − Markdown% ÷ 100)
Example: List Price $80, Markdown 25% → Sale Price = $80 × 0.75 = $60
Markdown Amount = $80 − $60 = $20 saved
Markdown Amount = $80 − $60 = $20 saved
List Price = Sale Price ÷ (1 − Markdown% ÷ 100)
Example: Sale Price $60, Markdown 25% → List Price = $60 ÷ 0.75 = $80
Verification: $80 × 0.75 = $60 ✓
Verification: $80 × 0.75 = $60 ✓
Markdown% = ((List Price − Sale Price) ÷ List Price) × 100
Example: List $100, Sale $65 → Markdown% = (($100 − $65) ÷ $100) × 100 = 35%
Common Retail Markdown Reference
| List Price | 10% Off | 25% Off | 40% Off | 50% Off | 70% Off |
|---|---|---|---|---|---|
| $20.00 | $18.00 | $15.00 | $12.00 | $10.00 | $6.00 |
| $50.00 | $45.00 | $37.50 | $30.00 | $25.00 | $15.00 |
| $100.00 | $90.00 | $75.00 | $60.00 | $50.00 | $30.00 |
| $250.00 | $225.00 | $187.50 | $150.00 | $125.00 | $75.00 |
| $500.00 | $450.00 | $375.00 | $300.00 | $250.00 | $150.00 |
Markdown vs. Markup — Key Difference
Markup is calculated on cost price and sets the list price. Markdown is calculated on list price and sets the sale price. A retailer who buys an item for $40 and marks it up 100% lists it at $80. If that $80 item is later marked down 25%, the sale price is $60. The gross profit is $60 − $40 = $20, and the gross margin is 33.3%. If the markdown exceeds the markup, the retailer sells below cost and takes a loss — sometimes intentional to clear dead inventory.
💡 Pro Tip: When evaluating a “X% off” promotion, always confirm what the markdown is calculated on. A legitimate markdown uses the original list price as the base. Some retailers inflate their list prices specifically to advertise larger markdown percentages. Use the reverse formula (List Price = Sale Price ÷ (1 − Markdown%)) to verify that the claimed list price is genuine.
Stacked Markdowns
A stacked or sequential markdown applies multiple percentage reductions one after another. A 20% markdown followed by an additional 10% markdown does not equal a 30% total markdown. The second markdown applies to the already-reduced price: $100 after 20% = $80, then 10% of $80 = $72. The combined effective markdown is 28%, not 30%. Use the formula: Final Price = List Price × (1−mk1) × (1−mk2) for stacked calculations.
Frequently Asked Questions
Markdown Amount = List Price × (Markdown% ÷ 100). Sale Price = List Price − Markdown Amount. Simplified: Sale Price = List Price × (1 − Markdown%/100). For example, a $80 item with a 25% markdown: Sale Price = $80 × 0.75 = $60. The markdown percentage is always calculated on the original list price, not the sale price.
Sale Price = List Price × (1 − Markdown% ÷ 100). For a $120 item with a 30% markdown: Sale Price = $120 × 0.70 = $84. This single-step formula is faster and more accurate than calculating the markdown amount first and then subtracting, because it avoids intermediate rounding errors.
List Price = Sale Price ÷ (1 − Markdown% ÷ 100). For example, a sale price of $70 after a 30% markdown: List Price = $70 ÷ 0.70 = $100. This reverse calculation lets you verify whether a stated list price is legitimate when a retailer advertises a percentage-off sale.
Markdown% = ((List Price − Sale Price) ÷ List Price) × 100. For a $100 item sold for $65: Markdown% = ((100 − 65) ÷ 100) × 100 = 35%. This formula works whenever you have both the original and sale price and need to calculate the percentage reduction that was applied.
A markdown is a permanent or semi-permanent reduction from the original list price — a deliberate repricing decision often recorded as an accounting entry that reduces inventory value. A discount is typically a temporary price reduction, promotional offer, or coupon-based reduction applied at the point of sale. Markdowns affect book inventory value; discounts typically do not.
Typical retail markdowns range from 10% to 75% depending on context. Seasonal promotions commonly use 20–30%. End-of-season clearance uses 40–60%. Deep clearance and liquidation runs 50–75%. A markdown above 50% often signals that the item was originally overpriced or is being liquidated below cost to recover any remaining value. Healthy retailers aim to keep markdowns below 30% of total revenue.
Markup adds to cost price to set the list price: List Price = Cost × (1 + Markup%). Markdown reduces the list price to set the sale price: Sale Price = List Price × (1 − Markdown%). A 100% markup on a $40 cost gives a $80 list price. A 25% markdown on $80 gives a $60 sale price. Gross profit = $60 − $40 = $20, a 33.3% gross margin.
Stacked markdowns apply multiple percentage reductions sequentially. Each reduction applies to the price after the previous markdown, not the original list price. A 20% markdown followed by 10% does not equal 30% total — it equals 28%. Formula: Final Price = List × (1−mk1) × (1−mk2). Example: $100 × 0.80 × 0.90 = $72, an effective 28% total markdown.
Every markdown directly reduces gross profit. If an item costs $50 and lists at $100 (50% gross margin), a 40% markdown brings the sale price to $60. Gross profit drops from $50 to $10 and margin falls from 50% to 16.7%. Deep markdowns can turn a profitable item into a loss-leader. Some retailers do this intentionally to drive foot traffic, accepting lower margins on marked-down items in exchange for overall store revenue.
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