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Markdown to Target Margin Calculator

Enter cost, original price, and target margin to see your maximum safe discount.

How it is calculated

Enter your unit cost, the original price and a target margin in percent. The tool works out the lowest price that still gives that margin, where margin means profit as a share of the selling price: floor = cost ÷ (1 − margin ÷ 100). The maximum discount is (original − floor) ÷ original × 100. If the floor is above the original price, no markdown is possible and the discount is shown as 0.00%, never as a negative figure; the floor price then tells you what price you would need. The margin must be below 100 and not negative, the original price must be above zero and cost cannot be negative; otherwise no result is shown. Prices are shown in US dollars, and no tax, shipping or fees are included.

Worked example

An item costs $60 and is listed at $100. You want to keep a 30% margin. Floor price: 60 ÷ (1 − 0.30) = 60 ÷ 0.70 = $85.71. Check: the profit is 85.71 − 60 = 25.71, and 25.71 ÷ 85.71 = 30%. Maximum discount: (100 − 85.71) ÷ 100 = 14.29%. Any markdown bigger than about 14.29% pushes the margin below 30%.

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Common mistakes

  • Mixing up margin and markup. Here margin is profit divided by the selling price. A 30% markup on a $60 cost would be $78, which is a different (and lower) floor than a 30% margin ($85.71).
  • Entering the discounted price instead of the original price. The result is a percentage off the price you type as original.
  • Reading 0.00% as a calculation failure. It means the original price already earns less than your target margin (for example a $80 cost with a $100 list price and a 30% target gives a floor of $114.29), so there is no room to discount.
  • Leaving out costs such as shipping, payment fees or returns. The cost field should be your full landed cost per unit, or the safe discount will be overstated.
  • Typing a margin of 100 or more, or a negative one. A margin of 100% would need an infinite price, so these entries show no result.

About this calculator

Retailers need to know how far they can discount an item before a sale stops being profitable. This calculator works backward from a target profit margin on the selling price to find the floor selling price — the lowest price that still delivers that margin (cost divided by one minus the margin) — then expresses the gap between the original price and that floor as the maximum safe discount percentage.

Because the margin is measured against the discounted selling price rather than against cost, the math isn't simply “target margin minus current margin”: as price drops toward cost, the same dollar markdown represents a shrinking margin percentage, so retailers use this floor-price approach — rather than eyeballing a discount — to make sure a markdown, flash sale, or clearance event doesn't quietly erode below the margin needed to cover overhead and stay profitable.

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Comments (1)

  • Editorial team

    With a cost of 40 and a list price of 100, a 30 percent target margin allows a markdown of 42.86 percent, down to a floor of 57.14 USD. Treat that floor as the lowest price a customer actually pays: a coupon, free shipping or a second stacked promotion each push the real price below it even if every single discount looks small. Which promotion types do you run on top of the markdown?

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