Markdown and Discount Pricing

Excel Formulas › Retail & Inventory

All versions

A markdown reduces a price by a percentage to move stock. Compute the sale price, the dollar saving, and chain multiple markdowns — the everyday math of clearance and promotions.

Quick formula: sale price after a markdown:
=original_price * (1 - markdown_rate)
Original price times one minus the markdown gives the sale price; the saving is price times the rate.

The example

$80 marked down 25%.

AB
1ItemValue
2Original80
3Less 25%→ $60

The formula

The formula:

=B2 * (1 - B3) // price × (1 − markdown)

How it works

How it works:

  1. original_price * (1 - markdown_rate) gives the sale price — 25% off $80 is $60.
  2. The dollar saving is original_price * markdown_rate.
  3. Chain markdowns by multiplying the factors: an extra 20% off the sale price is price * 0.75 * 0.80.
  4. To hit a target price, solve the rate: 1 - target / original.

Stacked discounts don’t add. “25% off, then 20% off” is not 45% off — it’s 1 - 0.75 × 0.80 = 40% off. Multiply the remaining-fraction factors; never sum the percentages, or you’ll overstate the discount and under-price the item.

Try it: interactive demo

Live demo

Original price and markdown(s).

Sale price · Save

Variations

Dollar saving

Amount off:

=original_price * markdown_rate

Stacked markdowns

Multiply factors:

=price * (1 - md1) * (1 - md2)

Rate for a target

Solve the discount:

=1 - target_price / original_price

Pitfalls & errors

Don’t add stacked discounts. Multiply the remaining factors — 25% then 20% is 40% off, not 45%.

Rate as decimal. 25% is 0.25 — check the cell isn’t storing 25.

Watch the margin. A deep markdown can push price below cost — check it stays profitable.

Practice workbook

📊
Download the free Markdown and Discount Pricing practice workbook
A markdown sheet with the saving, stacked, and target-rate variants, plus 4 challenges with answers. No sign-up required.

Frequently asked questions

How do I calculate a markdown price in Excel?
Multiply by one minus the rate: =original_price * (1 - markdown_rate). 25% off $80 is $60.
How do I stack two discounts?
Multiply the remaining-fraction factors: =price * (1 - md1) * (1 - md2). 25% then 20% is 40% off, not 45%.
How do I find the markdown rate for a target price?
Use =1 - target_price / original_price to get the discount needed to reach the target.

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