Clothing Markdown Calculator: The Short Answer
A brand sells a hoodie for £40 before VAT. It costs £12.50 landed and £4.00 to pick, pack and post, so the profit is £23.50, a margin of 58.8 per cent. A 20 per cent discount takes the price to £32.00 and the profit to £15.50, a drop of 34 per cent, and the margin to 48.4 per cent. To earn the same total profit the brand must sell 51.6 per cent more hoodies. The clothing markdown calculator does that sum for any price, cost and discount, and for a stacked second discount.
The figures in this clothing markdown calculator are placeholders chosen to show the method. The shape of the answer holds for any garment: a discount cuts profit by a larger share than the discount itself, because the cost does not fall with the price.
Use the Clothing Markdown Calculator
Choose whether you are testing a discount or a price increase. Enter your current price before VAT, the landed cost per unit and any other variable cost. Enter the percentage change, and a second discount if you plan to stack a code on a sale price. The clothing markdown calculator returns the new price, the profit and margin per unit, and the extra units you must sell, or can afford to lose, to match the old profit.
Clothing markdown calculator
Sale price, margin and extra units needed
Prices are before VAT; a percentage discount applies equally to the VAT-inclusive shelf price. Placeholder figures for illustration. Returns and marketing are not included.
Start with a cost you trust before you use the clothing markdown calculator. A landed cost built with the clothing markup calculator or the garment costing calculator is better than the factory price, because a markdown on top of an understated cost can push a sale below break-even without anyone noticing.
Why a Discount Costs More Than Its Percentage
A discount is taken from the price, but your costs stay where they are. The £8.00 you give away on a £40 hoodie comes straight out of the £23.50 profit, which is 34 per cent of it, not 20 per cent. The deeper the discount, the larger the share of profit it removes, and the faster the extra sales you need grow.
Working out the cost of a markdown
- 1Find the profit per unitPrice minus landed cost and other variable cost.
- 2Apply the discountSale price = price × (1 − discount).
- 3Find the new profitSale price minus the same costs.
- 4Divide old by newOld profit ÷ new profit = volume multiple needed.
- 5Subtract oneThe result is the extra sales needed, as a share.
A volume multiple of 1.52 means selling 52 per cent more at the sale price to earn what you earned before. Whether that is realistic depends on the style, the audience and the season. Our guide to pricing clothing for wholesale and retail discusses where prices come from.
What Each Discount Level Does
The table applies five discount levels to the example hoodie. It shows the sale price, the profit and margin that remain, and the extra sales needed to match the old profit of £23.50 a unit. The last column is the one to read twice.
Effect of a discount on a £40 hoodie with £16.50 of cost
| Discount | Sale price | Profit per unit | Margin | Extra sales to match old profit |
|---|---|---|---|---|
| 10% | £36.00 | £19.50 | 54.2% | +20.5% |
| 20% | £32.00 | £15.50 | 48.4% | +51.6% |
| 30% | £28.00 | £11.50 | 41.1% | +104.3% |
| 40% | £24.00 | £7.50 | 31.3% | +213.3% |
| 50% | £20.00 | £3.50 | 17.5% | +571.4% |
Arithmetic: £40 price, £12.50 landed cost, £4.00 other variable cost. Illustrative figures. Assumes costs stay constant.
Extra sales needed to match the old profit, by discount
Extra units (%)
Arithmetic from the table above. Illustrative figures.
The numbers climb steeply. At 30 per cent off you must sell more than double, and at 50 per cent off almost seven times as many, because only £3.50 of profit is left on each unit. The retail trade body British Retail Consortium publishes commentary on retail trading, but your own costs are what set the limit.
Where the Sale Price Goes
The pie shows how the £32.00 sale price in the 20 per cent example divides. The costs take the same £16.50 as before, so the profit slice is the remainder.
Where a £32 sale price goes after 20% off a £40 hoodie
- Landed cost (£12.50)39.1%
- Other variable cost (£4.00)12.5%
- Profit (£15.50)48.4%
Arithmetic: £12.50 landed + £4.00 other variable leaves £15.50 profit, which is 48.4 per cent of £32. Illustrative figures.
Compare it with the full-price split, where profit was 58.8 per cent of the price. The discount has given away ten points of margin. Our guide to improving full-price sell-through looks at alternatives to deep discounting.
Stacked Discounts Are Not Added Together
A second discount applies to the already reduced price, so two discounts together take off less than their sum. A 20 per cent sale followed by a 10 per cent code is a 28 per cent reduction, not 30. The table shows four combinations.
Effective discount from two stacked discounts on a £40 price
| Combination | Effective discount | Final price |
|---|---|---|
| 20% then 10% | 28.00% | £28.80 |
| 30% then 20% | 44.00% | £22.40 |
| 25% then 25% | 43.75% | £22.50 |
| 40% then 10% | 46.00% | £21.60 |
Arithmetic: effective discount = 1 − (1 − first) × (1 − second). Illustrative combinations.
Stacking is where margin quietly disappears, because each offer looks small on its own. If your shop allows a code on top of a sale, put both into the calculator before you launch. The VAT on the final price is calculated on the amount the customer pays, and the current rates are on GOV.UK VAT rates.
The Other Direction: What a Price Increase Is Worth
The same arithmetic runs in reverse. A price increase adds profit on every unit, so you can lose some sales and still earn the same. The table shows how many unit sales you could lose after three increases on the example hoodie before total profit fell below the old level.
Price increases and the sales you can afford to lose
| Price increase | New price | Profit per unit | Unit sales you can lose |
|---|---|---|---|
| 5% | £42.00 | £25.50 | 7.8% |
| 10% | £44.00 | £27.50 | 14.5% |
| 15% | £46.00 | £29.50 | 20.3% |
Arithmetic: 1 − old profit ÷ new profit, with £16.50 of cost. Illustrative figures. Assumes costs stay constant.
A 10 per cent rise lets you lose about one sale in seven and still earn the same. That does not make a rise safe, since demand may fall by more, but it shows that a price increase works for you more than most brands expect. Test it with the clothing profit margin calculator.
When a Markdown Makes Sense and When It Does Not
A markdown is sometimes the right call. Stock that will not sell at full price earns nothing while it sits, and a modest discount that clears it frees cash for the next buy. The calculator helps here by showing the margin that is left. If the sale price still covers cost and some profit, clearing is rational even though each unit earns less.
It is a worse call when it trains customers to wait. If every style is discounted twice a season, shoppers learn to buy on sale, and full-price sell-through falls. The better habits are to buy closer to demand, which our guide to reducing hoodie overstock without losing bestseller sales describes, and to price at a level where deep discounts are rarely needed.
Markdowns and Your Cost Base
The lower your landed cost, the more room you have to discount without eroding profit. A style with a wide margin can take a 20 per cent discount and still earn well, while one with a thin margin cannot. That is a reason to understand costs before pricing, and to pay attention to the line items a markdown calculator cannot change: fabric, make, freight and duty.
If the calculator shows a sale price that leaves almost nothing, the conclusion is not necessarily to discount less. It may be that the cost is too high for the price point, and the right fix is upstream: a different fabric, a simpler construction or a different quantity. The clothing markdown calculator shows the symptom, and the cost sheet shows the cause.
Before You Run a Sale
A sale is a decision about cash, stock and brand, not only arithmetic. A short checklist keeps it grounded.
Checks before you set a markdown
- Is landed cost correct, with freight and duty included?
- What is the margin at the sale price, after other costs?
- How many extra units must sell, and is that plausible?
- Are second discounts or codes stacking on top?
- Will the sale pull full-price sales forward?
- What will returns do to the result?
A general checklist. Your own numbers decide what is acceptable.
Returns eat into sale profit too, which the return rate calculator quantifies. To decide whether a style needs a markdown at all, check the sell-through rate calculator. Our UK VAT calculator for clothing splits VAT out of the shelf price.
How Ruhrose Helps You Price With Confidence
Ruhrose develops hoodies, fleece, jersey, denim and woven casualwear for UK buyers, with production in Bangladesh. We explain what goes into a quote, sample before bulk and help you build a landed cost you can rely on, so that any markdown you plan sits on a number you trust. Ruhrose's clothing manufacturing pages show what we make.
Before you launch a sale, ask yourself one question: how many more units must sell to earn what you earn today?