Markup & Markdown Calculator

Markup and markdown are two sides of pricing strategy — markup increases a base cost to set a selling price, while markdown reduces a price from its original level. Despite their symmetry, the formulas are different, and confusing them is one of the most common errors in retail pricing.

Markup formulas (cost → price):

Selling Price = Cost × (1 + Markup %)

Markup % = (Selling Price − Cost) ÷ Cost × 100

Gross Profit = Selling Price − Cost

Markdown formulas (price → discounted price):

Sale Price = Original Price × (1 − Markdown %)

Markdown % = (Original Price − Sale Price) ÷ Original Price × 100

Dollar Savings = Original Price − Sale Price

The markup vs. margin distinction (critical):

Gross Margin % = Gross Profit ÷ Selling Price × 100

Markup % = Gross Profit ÷ Cost × 100

A 50% markup yields only a 33.3% margin. A 100% markup yields a 50% margin.

Worked example — Markup: A retailer buys a jacket for $45 and wants a 60% markup.

• Selling Price = $45 × 1.60 = $72.00
• Gross Profit = $72 − $45 = $27.00
• Gross Margin = $27 ÷ $72 = 37.5%

Worked example — Markdown: That same jacket, originally priced at $72, goes on a 25% markdown sale.

• Sale Price = $72 × (1 − 0.25) = $54.00
• Dollar savings = $72 − $54 = $18.00
• At $54 sale price, the original $45 cost still yields $9 gross profit — a 20% margin

Common retail markup benchmarks: