Planned markdown calculator

Too many small businesses use a very simple plan in determining the margins of their merchandise. They simply look at the cost and then apply a multiplier factor to the cost to determine the selling price.

As the merchandise ages, they begin to randomly take markdowns in an effort to get rid of the merchandise. If the buyer were to calculate the maintained gross margin when all of the merchandise has been sold, they would likely be surprised at what their margin was. The surprise may be how high of a margin they maintained as well as it could be a surprise as to how low it was; but either way, in most cases they are surprised.

This calculator is created to resolve that. Sophisticated buyers do not settle for looking at their initial margin; they have a plan as to when, with how many on hand, and by how much to mark merchandise down. This is exactly how this calculator works. It allows you to plan for four markdowns over the season of an item. By determining how long the merchandise will be sold at full price, you will then decide when, how many, and by how much the merchandise will be discounted.

Proceed with this calculation for up to four periods, and this calculator will tell you what your maintained margin will be for the entire season of the product. This is a much better way than just guessing as you go through the season, and it is likely that you will end the season with less of the inventory on hand, and with fewer markdowns.