Price Markdown Calculator

Markdown depth, recovery and margin left.

Calculate markdown percentage, the margin remaining, and the sell-through needed to clear stock at each markdown level.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Original price

Markdown

Unit cost

Units remaining

Markdown price

$39.00

35.0% off

Margin at markdown38.5%

Profit per unit$15.00

Cash released if all sell$3,120

Cost recovered162.5%

One decisive markdown usually clears stock better than a series of shallow ones, which train buyers to wait.

How the Price Markdown Calculator works

Markdowns are a stock problem, not a pricing problem. The question is never simply how much to take off. It is whether the cash released and the storage freed beat holding out for a better price that may never arrive.

Also known as: clearance price calculator · stock reduction pricing · markdown percentage calculator · how to calculate markdown · markdown calculator · price markdown · percent markdown

The arithmetic

A markdown reduces the price of existing stock: new price = original × (1 − markdown). The relevant comparison is not against the original price, which is a sunk decision, but against the cost of continuing to hold the stock.

Written out: recovery = markdown price − the storage, capital and obsolescence cost of holding the units until they sell at some higher price. That framing usually justifies a deeper markdown than instinct suggests.

How that looks in practice

480 units costing $18 each, originally priced $58, now marked down 50% to $29. Contribution per unit is $11 against $40 at full price.

Selling 70% at the markdown recovers $9,744 and leaves 144 units. Holding those 144 for nine months at 20 cents a unit a month costs $259 in storage alone, plus the capital tied up and the risk they are worth less still by then.

A deeper markdown that clears all 480 at $24 recovers $11,520 with contribution of $6 a unit: less per unit, more in total, and no residual stock. The shallower markdown feels more disciplined and produces less money.

Where this breaks down

The original price is irrelevant to the decision and dominates the conversation anyway. Money spent on the stock is gone; the only live question is which route recovers most from here.

Markdown timing also matters more than depth. Stock loses value with age in nearly every category, and the first markdown is almost always cheaper than the third, which means a shallow early markdown frequently costs more than a deeper one would have.

Where to go from here

Set a markdown calendar rather than making the decision case by case. Stock that has not sold in a defined period gets marked down on a schedule, which removes the reluctance that causes businesses to hold ageing stock at full price for another quarter.

Mark down deep enough to clear within a defined window rather than shallow enough to feel comfortable. A markdown that shifts a fifth of the stock leaves you making the same decision three months later, having paid three more months of storage.

Protecting the brand while clearing stock

Repeated visible markdowns train customers to wait, which is the real cost of a clearance habit. A brand whose sale is predictable has effectively lowered its price permanently and kept the higher number on the label.

The routes that limit the damage: a separate outlet channel, a private sale to an email segment, bundling the ageing stock with full-price items, or wholesale liquidation. Each keeps the discount away from the main storefront where it sets the reference price.

For a small brand the email-segment route is usually the most practical. It clears stock, rewards the customers most likely to buy, and never appears on the public site, which means the product's reference price survives the clearance intact.

It also helps to separate the markdown decision from the person who bought the stock. Buyers are reluctant to mark down their own purchasing decisions, and that reluctance is the main reason ageing stock sits at full price for another season.

A rule that triggers on age rather than on judgement removes the personal element entirely, which is why markdown calendars outperform case-by-case decisions in almost every retail business that has compared the two.

Where to go next

The Price Markdown question rarely arrives on its own. These are the ones that usually come with it:

Clearance Markdown Calculator — Compare against holding cost, not the original price.
Dead Stock Calculator — Value trapped in stock that is not moving.
Sell-Through Rate Calculator — What proportion of received stock actually sold.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How is markdown percentage calculated?

(Original price − markdown price) ÷ original price × 100. From £60 to £39 is a 35% markdown. Note this differs from markdown as a share of the reduced price, which some retail systems report instead.

How deep should the first markdown be?

Deep enough to move stock. Retail experience favours one decisive cut over a series of shallow ones, repeated small reductions train buyers to wait, and the stock ages while they do.

When should I mark down?

Once sell-through falls behind the rate needed to clear before the stock loses relevance. Seasonal goods have a hard deadline; the cost of holding past it usually exceeds the margin you were protecting.

Should I mark down below cost?

Sometimes, yes. Money tied up in stock that will not sell is worth less than cash you can redeploy, and storage costs accrue. Recovering 60% of cost now often beats 0% indefinitely.