Markdown Formula:
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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.
The calculator uses the markdown formula:
Where:
Explanation: The formula calculates what percentage of the original price has been reduced to reach the sale price.
Details: Calculating markdown percentage helps retailers understand pricing strategies, profit margins, and inventory management. It's crucial for sales analysis and financial planning.
Tips: Enter original price and sale price in USD. Both values must be valid (original price > 0, sale price between 0 and original price).
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.