Clearance Markdown Calculator

Should you mark down 10% now, or go straight to 40% clearance? Compare both strategies.

Original Price

Unit Cost

Inventory Quantity

units

Strategy A: Gradual Markdown

Phase 1 Markdown (sells ~30%)

Phase 2 Markdown (sells ~40%)

Phase 3 Markdown (sells ~30%)

Strategy B: One-Time Clearance

One-Time Clearance Markdown

Strategy A: Gradual Markdown

Phase 1: 60 units × $90.00$5,400

Phase 2: 80 units × $75.00$6,000

Phase 3: 60 units × $50.00$3,000

Total Revenue$14,400

Total Profit$6,400

Avg discount28.0%

Strategy B: One-Time Clearance

All units: 200 units × $70.00$14,000

Total Revenue$14,000

Total Profit$6,000

Comparison

Revenue difference+$400

Profit difference+$400

The Hidden Cost of Not Marking Down

Holding unsold inventory is never free. Carrying costs — storage, insurance, capital tied up — typically run 20-30% of inventory value per year. Every month your shelves hold last season's products, you're paying for the privilege of not selling them.

Beyond carrying costs, there's the opportunity cost: shelf space occupied by stale inventory can't hold new, full-price products that could generate higher margins.

Monthly carrying cost = Inventory value × 2% = $8,000/month for $400K inventory

Gradual vs. One-Time Markdown Comparison

Strategy	Avg Discount	Revenue Capture	Risk	Best For
Gradual	Lower (~25%)	Higher total	Takes time, needs monitoring	Products with residual demand
One-Time	Higher (~30-40%)	Lower total	Faster, clears space immediately	Fashion/seasonal with hard expiry

The Markdown Timing Framework

Week 1-2 after season: 10-15% off — test residual demand at a shallow discount.

Week 3-4: 20-30% off — accelerate sell-through as carrying costs mount.

Week 5+: 40-50%+ off — must clear to free capital and shelf space for new inventory.

Every week of delay costs you approximately 0.5% of inventory value in carrying costs

Calculate any price with our 10% Off Calculator →

Frequently Asked Questions

Start within 2 weeks of the season ending, beginning at 10-15%. Early markdowns capture customers who still want the product but not at full price. Waiting too long means competing with other retailers who started clearing earlier, forcing deeper discounts.

Not always. If storage costs are high, items are perishable, or the product has a hard expiration date (e.g., holiday-themed merchandise), a fast deep clearance can be more profitable. Gradual works best when there is steady residual demand and low carrying costs.

Research shows 20-30% is the "sweet spot" — enough to motivate purchases without signaling defective or undesirable goods. Below 15%, most shoppers don't perceive enough value. Above 40%, some customers question product quality.

Use gradual markdown for items with steady residual demand, low carrying costs, and no hard expiration. Use one-time deep clearance for fashion and seasonal items with hard expiration dates, products with high storage costs, or when you need shelf space urgently for new inventory.

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Clearance Markdown Calculator

The Hidden Cost of Not Marking Down

Gradual vs. One-Time Markdown Comparison

The Markdown Timing Framework

Frequently Asked Questions

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