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Markdown Calculator

Markdown Formula:

\[ \text{Markdown \%} = \frac{\text{Original Price} - \text{Sale Price}}{\text{Original Price}} \times 100 \]

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1. What is Markdown Percentage?

Markdown percentage is the reduction in price expressed as a percentage of the original price. It shows how much the price of an item has been decreased from its original selling price.

2. How Does the Calculator Work?

The calculator uses the markdown formula:

\[ \text{Markdown \%} = \frac{\text{Original Price} - \text{Sale Price}}{\text{Original Price}} \times 100 \]

Where:

Explanation: The formula calculates what percentage of the original price has been reduced to reach the sale price.

3. Importance of Markdown Calculation

Details: Calculating markdown percentage helps retailers understand pricing strategies, profit margins, and inventory management. It's crucial for sales analysis and financial planning.

4. Using the Calculator

Tips: Enter original price and sale price in USD. Both values must be valid (original price > 0, sale price between 0 and original price).

5. Frequently Asked Questions (FAQ)

Q1: What's the difference between markdown and markup?
A: Markdown is a price reduction from original price, while markup is an increase from cost price to selling price.

Q2: Can markdown percentage be more than 100%?
A: No, since sale price can't be negative, maximum markdown is 100% (giving a sale price of 0).

Q3: How is markdown different from discount?
A: They're similar concepts, but markdown typically refers to permanent price reductions while discounts are often temporary.

Q4: Why do retailers use markdowns?
A: To clear inventory, attract customers, compete with other retailers, or respond to decreased demand.

Q5: How does markdown affect profit margins?
A: Markdowns reduce profit per item but may increase total profit if they lead to higher sales volume.

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