Markdown Calculator

Formula

To calculate the new price (NP) from a markdown:

\[ NP = OP - \left( OP \times \frac{MD}{100} \right) \]

Where:

$ NP $ is the new price
$ OP $ is the original price
$ MD $ is the markdown percentage

What is Markdown in Finance?

In finance, the term “markdown” refers to the purposeful reduction in the price or value of a good or service. This method makes goods cheaper, more desirable, and thus much more competitive in the market. Despite reducing the price, the overall revenue can be more profitable as it encourages a larger number of units to be sold.

Example Calculation

Let's assume the following values:

Original Price $ OP $ = $100
Markdown Percentage $ MD $ = 20%

Step 1: Use the markdown calculation formula:

\[ NP = 100 - \left( 100 \times \frac{20}{100} \right) = 100 - 20 = 80 \]

The new price is $80.