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Free Markdown Calculator Online

Calculate markdown metric with free online calculator banner

A markdown calculator is used by businesses to maximize profits. They track how much you discount inventory, helping you identify areas to tighten pricing or move slow-selling items. By analyzing markdown data, you can forecast future markdowns and ensure promotions drive sales without sacrificing margins.

Calculate Markup

Markdown formula

There are two main formulas for markdown calculation, depending on what you’re trying to find:

1. Finding the Markdown Amount

Markdown Amount = Original Price – Selling Price

This formula subtracts the discounted selling price from the original price to determine the amount of money discounted.

2. Finding the Selling Price (Discounted Price)

Selling Price = Original Price – Markdown Amount

Here, you subtract the markdown calculator amount (the discount) from the original price to get the customer’s final selling price.

3. Finding the Markdown Percent

Markdown Percent = (Original Price – Selling Price) / Selling Price * 100%

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How To Generate Formulas With AI?

Here’s a step-by-step guide on how to make your spreadsheet life easier with AI:

1. Create a free Ajelix account

Ajelix platform offers over 15 tools, including a formula generator for Excel, to help you breeze through common spreadsheet tasks. Sign up easily with your Gmail or any other email address to get started.

Register on and create a free account to generate formulas screenshot from platform

Screenshot from Ajelix registration page, image by author

2. Write a clear and concise prompt

The key to getting an accurate formula is providing a clear description of what you want to achieve. For example, if you want to get the NPV formula, you would write: “Give me the markdown formula if original price is in cell A2 and selling price in B2”.

Markdown formula prompt for AI formula generator, screenshot with example

Screenshot from Ajelix formula generator with markdown prompt, image by author

Craft clear prompts for powerful formulas:

  1. Focus on the goal: Ditch generic phrases like “I need a formula.” Instead, tell the AI what you want to achieve. For example, instead of the generic phrase, say: “Calculate the average sales in column B, but only for approved items marked ‘Yes’ in column A.”
  2. Speak the language of cells: If your platform lets you, include specific cell references or ranges by name. This helps the AI pinpoint the data you’re working with. For instance, say: “Calculate the total cost (column C) by multiplying the quantity (column A) by the price (column B).”
  3. Get specific with conditions: If your formula involves conditions, explain them clearly. For example, say: “In cell D2, return ‘Bonus’ if sales (column B2) exceed the target (cell E1). Otherwise, return ‘No Bonus’.”

4. Get your formula

The AI will analyze your prompt and provide a ready-to-use formula you can directly copy and paste into your spreadsheet. For even smoother formula creation, consider using an Excel or Google Sheets add-on specifically designed for AI formula generation (see the example below for an accurate formula generated by AI).

Markdown formula result from prompt, screenshot from ajelix portal

Screenshot from Ajelix with NPV formula result, image by author

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How To Calculate Markdown in Excel?

Time needed: 5 minutes

Here’s a step-by-step guide on how to calculate the markdown amount and percentage

  1. Gather the information:

    Find the original price of the item before any discounts were applied and the selling price, which is the discounted price the customer pays.
    Screenshot from Excel with example data table for markdown calculation

  2. Calculate the markdown amount

    Use the formula: Markdown Amount = Original Price – Selling Price Subtract the selling price from the original price to find the amount of money discounted.
    how to calculate markdown calculation in excel spreadsheet, screenshot by author

  3. Calculate the markdown percentage

    Use the formula: Markdown Percent = (Original Price – Selling Price) / Selling Price * 100%
    Divide the markdown calculator amount you just calculated by the original price. Multiply the result by 100% to express the markdown as a percentage.
    Markdown percentage calculation in excel, example screenshot

  4. Format cell as a percentage

    Once you have the calculation, go to the Home toolbar under Number settings, and click Percentage.
    Format cell result as a percentage in excel

  5. Create a chart for a better understanding

    If you have several data items you can create a chart to understand correlations between the markdown amount and the original price.
    Markdown amount visualized in Excel chart, screenshot by author

Where markdown data is used?

Markdown metrics are used in various business contexts, primarily by retail and e-commerce companies, to track and analyze discounts offered on products. Here are some key areas where the markdown calculator play a crucial role:

Infographic on where markdown data is used image by author

Infographic with 4 points on where markdown data is used, image by author

  • Pricing Strategy Analysis: Businesses use markdown metrics to assess the effectiveness of their pricing strategy. By tracking total markdown value and markdown rate (percentage discount), they can identify areas where prices might need to be adjusted to optimize profitability.
  • Inventory Management: Markdown metrics can indicate slow-moving inventory. When certain items are discounted more frequently or have a higher average markdown rate, it might be a sign they need to be cleared out or replaced with different products.
  • Sales Performance Evaluation: Businesses can use markdown metrics to see if discounts are actually stimulating sales. If a high markdown rate isn’t leading to increased sales volume, it might be time to adjust the pricing strategy or marketing approach for those products.
  • Budgeting and Forecasting: By analyzing historical markdown data, it can help make informed predictions about future discounts needed to clear inventory or meet sales targets. This helps with budgeting for future markdown expenses.

Benefits of Calculating Markdown Metric

Markdown data, often overlooked, holds valuable insights for businesses. Here’s a breakdown of the key benefits derived from utilizing markdown data:

Improved Pricing StrategyAnalyze markdown rates and value to identify areas for price adjustments. Optimize profitability by avoiding overpricing and excessive discounts.
Smarter Inventory ManagementIdentify slow-moving inventory through frequent discounts or high markdown rates. Optimize inventory by clearing out slow sellers and restocking with popular products.
Effective Sales EvaluationSee if discounts are actually driving sales. Re-evaluate pricing or marketing strategies if high markdowns aren’t leading to increased sales volume.
Informed Budgeting and ForecastingAnalyze historical markdown data to predict future discounts needed for inventory clearance or sales targets. This helps with budgeting for future markdowns and ensuring adequate stock levels.
Table summarizing markdown metric benefits

As you can see, markdown data goes beyond simply tracking discounts. It empowers businesses to make data-driven decisions that optimize pricing, inventory management, promotions, and ultimately, profitability.

Markdown metric limitations

Markdown data, while useful, has some limitations to consider:

Limited ScopeMarkdown data only reflects the discounting aspect of pricing. It doesn’t consider factors like cost of goods sold, competitor pricing, or overall market demand, which are crucial for a complete pricing strategy.
Accuracy DependenceThe accuracy of markdown data hinges on accurate recording of original prices and selling prices. Inconsistent data entry or errors can lead to misleading calculations and hinder effective analysis.
Limited Customer Behavior InsightsMarkdown data doesn’t directly tell you why customers are or aren’t responding to discounts. You might need to combine it with other customer behavior data (like purchase history or demographics) to understand buying patterns.
Potential for MisinterpretationA high markdown rate might not always be negative. It could indicate a successful clearance sale or effective promotion. Analyzing markdown data in isolation, without context, could lead to misinterpretations and missed opportunities.
Markdown metric limitations summarized in a table


What is the difference between markdown and markup?

Markdown is used for sales and discounts, while markup is used to determine the retail price from the wholesale cost. Markdown: Reduces the price of an item (original price – discount = selling price). Markup: Increases the price of an item (wholesale price + markup = selling price).

What are the two main types of markdown calculations?

Finding the markdown amount and finding the selling price.

How can I use markdown calculations to optimize my pricing strategy?

Markdown calculations can reveal overpricing, show if promotions are working, and help manage slow-moving inventory.

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