Enter your cost, gross margin, and markdown percentage to find the list price you need to set — so you can offer customers a discount and still hit your profit targets. The calculator returns your required list price, selling price (revenue), gross profit, and markup percentage based on the values you know.
List Price
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Selling Price (Revenue)
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Gross Profit
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Gross Margin
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Mark Up
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Markdown Amount
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A markdown is a reduction in the original listed price of a product, typically applied when the item isn't selling well at the original price. It represents the difference between the list (tag) price and the actual selling price offered to the customer.
The core relationship is: List Price × (1 − Markdown%) = Selling Price (Revenue). Rearranged: List Price = Selling Price ÷ (1 − Markdown%). This lets you work backwards from a target selling price to the tag price you need to set.
Markdown % = ((List Price − Selling Price) ÷ List Price) × 100. For example, if the list price is $50 and the selling price is $40, the markdown is ($50 − $40) ÷ $50 × 100 = 20%.
Markup is calculated as a percentage of cost — it tells you how much you added to the cost to arrive at a price. Markdown is calculated as a percentage of the list price — it tells you how much you reduced the list price for the customer. They are measured against different base values.
The markdown amount is $200 − $160 = $40, and the markdown percentage is $40 ÷ $200 × 100 = 20%. In this example $200 is already the list price. If instead $160 is your target selling price and you want a 20% markdown, the required list price would be $160 ÷ (1 − 0.20) = $200.
Gross margin is the percentage of revenue (selling price) that becomes profit after covering cost. Once you know your desired gross margin and cost, you can determine the required selling price. Combined with your markdown percentage, the calculator then works out the list price needed to achieve both goals simultaneously.
Yes — the purpose of this calculator is to set a list price high enough that even after the markdown discount, your selling price still covers your cost and delivers the gross margin or profit you need. The key is building the markdown into your pricing strategy from the start.
The terms are often used interchangeably in retail, but technically a markdown is a permanent reduction in the listed price, while a discount may be a temporary or conditional reduction offered at checkout. Both reduce the amount a customer pays relative to the original tag price.