Markdown Calculator

How it works

A markdown expresses a price cut as a share of where the price started, which is what lets you compare a discount on a $20 item against one on a $2,000 item on equal footing. You take the dollar drop and divide it by the original price:

• original — the price before the markdown
• new — the current, marked-down price

With the defaults, a drop from $80 to $60 is a $20.00 reduction, and $20 ÷ $80 = 25%. The percentage stays meaningful even when the prices are far larger or smaller, which a raw dollar figure cannot do.

✓ Every result is checked against independent reference math. See how we test the calculators →

A worked example: $80 jacket down to $60

A jacket rings up at a new price of $60 after starting at $80 on the tag. Feed both numbers in and the markdown comes out to 25% off, a quick way to check whether a sale is as deep as it looks.

The drop itself is $20.00, the difference between the original $80 and the $60 you actually pay. Divide that $20.00 by the starting $80 and you get the 25% markdown, which is simply the share of the old price that was cut away.

This works the same whether you are a shopper sizing up a clearance sign or a store owner deciding how to tag slow-moving stock. Type in your own original and new prices to see the markdown on anything.

Markdown versus margin

Shoppers and sellers measure the same price cut from opposite ends. A markdown is the drop as a percentage of the original price, which is what a customer sees on the tag. A retailer instead tracks margin, the profit left as a percentage of the selling price.

That is why a 25% markdown does not translate into a 25% hit to profit: the two percentages are taken against different bases. When you are the buyer, the markdown is the number that matters, because it tells you how much of the original price you are no longer paying.

A second example on bigger prices

The formula scales to any prices. A couch dropping from $1,800 to $1,260 is a $540 fall, and $540 ÷ $1,800 = 30% markdown. A paperback going from $18 to $12 is a $6 fall, and $6 ÷ $18 = 33.3%.

The dollar drops are wildly different, $540 against $6, yet the percentages sit close together, which is exactly what makes them comparable.

• Always divide by the original. The drop is measured against where the price started, so the larger, pre-sale number goes on the bottom.
• Percent travels across price tiers. A 30% markdown means the same proportional saving whether the item costs $18 or $1,800.
• Keep the dollar drop in view too. The percentage shows how deep the cut is; the dollars show how much cash it actually frees up.

What the markdown percentage tells you

A markdown percentage is a quick read on how aggressive a price cut is. There is no universal good number, but the size hints at what is going on behind the tag. Small single-digit cuts are routine promotions, while very deep markdowns usually signal clearance or end-of-line stock.

• Under 10%: a light nudge, common on items that sell fine at full price and rarely worth rushing for.
• Around 20% to 40%: a real sale, the range most seasonal and holiday events land in.
• Over 50%: often clearance, discontinued lines, or open-box stock. The saving is genuine, but check why it is being cleared and whether returns still apply.

Markup and markdown are not mirror images

It is tempting to think a markup and a markdown of the same percentage cancel out. They do not, because each is measured against a different price. Mark an item up 25%, then mark it down 25%, and you land below where you started, since the second cut is taken from the higher, marked-up figure.

• Start at $100, mark up 25%: the price is $125.
• Mark that down 25%: you take $31.25 off, landing at $93.75, not $100.
• The base changes each time. Percentages only add up when they share a base, so a markup and markdown of equal size never return you to the original price.

Using markdowns to rank deals

Because a markdown puts every price cut on the same scale, it is a fast way to rank sales across a whole cart or wishlist. Convert each item’s drop to a percentage and you can see at a glance where the real value sits, rather than being swayed by big dollar figures on expensive items.

• Rank by percent, act on dollars. The percentage shows which deal is deepest; the dollar drop shows which one moves your budget most.
• Beware tiny markdowns dressed up as sales. A 4% cut labelled a sale is barely a discount once you run the numbers.
• Track a price over time. Recording the markdown at each drop tells you whether an item is easing down slowly or has hit a genuine floor.