How do you calculate a retail markdown?

Markdown percentage = (original retail − new retail) ÷ original retail. A $49.00 ticket reduced to $34.30 is (49 − 34.30) ÷ 49 = 30%. Markdown dollars = (original retail − new retail) × units sold at the reduced price, which is the figure that appears in a season review.

What is the markdown amount formula?

Markdown amount per unit = original retail × markdown percentage. At a $49.00 ticket and 30%, the reduction is $14.70 per unit and the new price is $34.30. Total markdown dollars multiply that $14.70 by the units actually sold at $34.30 — not by the units you own.

How do successive markdowns work?

Successive markdowns compound off the current price, not the original. 20% then another 25% off the reduced price gives 0.80 × 0.75 = 0.60 of the original, which is a cumulative 40% markdown — not 45%. Always convert successive breaks to a cumulative percentage off the original ticket before comparing plans.

How do I find the original price after a markdown?

Original retail = current price ÷ (1 − markdown percentage). A $34.30 price at 30% off implies 34.30 ÷ 0.70 = $49.00. This is also how you check that a stated 'was' price is consistent with the discount being advertised.

How do you calculate markdown percentage on total sales?

Markdown percentage of sales = total markdown dollars ÷ net sales. It is the figure most retailers track period to period, and it is the same number a markdown reserve is set against at plan time. Note the denominator is net sales, not gross retail value of the inventory.

How is maintained margin calculated?

Maintained margin = (net sales − cost of goods sold) ÷ net sales, where net sales already reflect every markdown. Subtract it from initial margin — (original retail − cost) ÷ original retail — to get margin erosion in percentage points.

Retail markdown formulas, with worked numbers

Every calculation a markdown plan needs, written out and worked through on one consistent example: 858 units, $18.00 unit cost, $49.00 original ticket, sold across four price periods. Two traps to watch — successive markdowns compound, and markdown percentage of sales uses net sales as its denominator.

Run these formulas on your numbers Maintained markup calculator

Retail markdown formula reference

Metric	Formula	Worked example
Markdown %	(original retail − new retail) ÷ original retail	(49.00 − 34.30) ÷ 49.00 = 30.0%
Markdown amount per unit	original retail × markdown %	49.00 × 0.30 = $14.70
New retail from a depth	original retail × (1 − markdown %)	49.00 × 0.70 = $34.30
Original retail from a price	current price ÷ (1 − markdown %)	34.30 ÷ 0.70 = $49.00
Total markdown dollars	markdown per unit × units sold at that price	14.70 × 231 = $3,395.70
Cumulative (successive) markdown	1 − ((1 − d₁) × (1 − d₂) × …)	1 − (0.80 × 0.75) = 40.0%
Markdown % of sales	total markdown dollars ÷ net sales	6,240 ÷ 29,272 = 21.3%
Average unit retail (AUR)	net sales ÷ units sold	29,272 ÷ 858 = $34.11
Initial margin	(original retail − cost) ÷ original retail	(49.00 − 18.00) ÷ 49.00 = 63.3%
Maintained margin	(net sales − COGS) ÷ net sales	(29,272 − 15,444) ÷ 29,272 = 47.2%
Margin erosion	initial margin − maintained margin	63.3% − 47.2% = 16.1 pts
Units sold in a period	units at start × (1 − (1 − weekly rate)^weeks)	676 × (1 − 0.90⁴) = 247 units

All examples use the same season: 858 units, $18.00 cost, $49.00 ticket, four price periods, $29,272 net sales.

Successive markdowns compound — convert before comparing

A second break taken off the reduced price is not additive. Convert every schedule to a cumulative percentage off the original ticket, otherwise two plans that look equal on paper are not.

Successive markdowns as a cumulative depth (from a $49.00 ticket)

Sequence	Multiplier	Cumulative depth	Final price
20% then 25%	0.80 × 0.75 = 0.60	40.0%	$29.40
20% then 30%	0.80 × 0.70 = 0.56	44.0%	$27.44
25% then 25% then 20%	0.75 × 0.75 × 0.80 = 0.45	55.0%	$22.05
30% then 40%	0.70 × 0.60 = 0.42	58.0%	$20.58
40% then 50%	0.60 × 0.50 = 0.30	70.0%	$14.70

The one formula most spreadsheets get wrong

Units sold in a price period should deplete the stock still on hand, not the original buy: units at period start × (1 − (1 − weekly rate)^weeks). Modelling against the original quantity lets a schedule sell more units than it owns, and it flatters late breaks by giving them a base they never had.

That single correction is usually the difference between a plan that looks like it clears and one that actually does.

Keep planning

Model your markdown schedule
The formulas above applied across up to six price periods, with a sensitivity band.
Retail markdown planning
How the numbers fit into a season plan, calendar, and markdown reserve.
Markdown vs markup
Markup is measured on cost, markdown on retail — the most common mix-up in a review.
Markdown schedule template
Which formula belongs in which spreadsheet column.

Answers

Markdown formula questions

Stop hand-checking markdown math

The planner applies every formula on this page across your schedule and reports maintained margin, ending stock, and cash recovered as a range.

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