A mark down is a reduction in price. In sales items, that are marked down are said to be on sale or discounted. In trading, brokers also mark down prices. When customers compare prices, that broker’s price will be lower than the current bid-price given by other brokers and/or dealers.
There are different reasons for marking down prices. In retail, outdated items or those nearing their expiration dates are often marked down. Marking new products down can also generate interest in the products. Storewide sales where lots of items are marked down at the same time generate more traffic and increase revenue since customers usually end up buying other items aside from those on sale. Sheer sales volume also increases revenue, despite a lower price per unit of some items.
Traders also mark down prices just enough to increase their revenue. As mentioned earlier, a price comparison will attract more customers, which is what the traders bank on. Though traders mark down prices, they do not lose profit since they never mark down the prices to less than or even to the cost price, which is the price the trader pays for the goods. In fact, traders make sure they have a minimum profit margin set to ensure that each sale will be profitable.
