Markdown A markdown is a reduction in a retail price that is necessary if the
item will not sell at the full selling price to which it has been marked up. The item
might not sell for a variety of reasons: the selling price was set too high or the item
is out of style or has become soiled or damaged. The seller “takes a markdown” by
lowering the price to sell it, thereby converting it to cash to buy future inventory that
will sell faster.