One of the biggest business problems faced by retailers of all kinds – apparel, mass, specialty, hard goods, food – is how to liquidate inventory at the end of the season as profitably as possible while following certain business rules and limitations. In retail practice, this problem is referred to as markdown optimization. The goal of markdown optimization is to determine which products in which stores to mark down, when to reduce the prices, and by how much. These decisions need to be made based on critical factors such as inventory levels, price elasticity, local preferences and demand. The markdown optimization problem is a complex mathematical problem due to the large number of product-location combinations and nonlinear objective and constraints. The problem is further complicated by a unique business rule called the markdown budget. Markdown budget is a virtual budget that puts a constraint on how deep the markdowns can go among a group of products. Product/location combinations can no longer be optimized independently in the presence of this constraint. In this article we propose an efficient two-step heuristic for solving the markdown problem with a common budget constraint.