I want to clear old stock in stages with an extra markdown each week; how do I plan the prices?
Enter the original price, then enter each week's markdown as its own discount, in order. The calculator's 'Discount steps' table gives you each week's price directly. For an item at 200 with 20%, then 15%, then 10%, then 10%, the prices run 160, 136, 122.4 and 110.16.
Why clear stock in stages
A deep cut on day one sells units that would have gone at a smaller discount. Stepping down gives each shopper the price that is enough for them: whoever wants the item buys in week one, and whoever holds out for less gets it later if it is still there. What you need before you start is to know where the chain ends.
Build the plan in the calculator
- Open the Discount calculator and type the original price, 200.
- Type the first week's markdown, 20.
- Press 'Add another discount' for each following week and type 15, then 10, then 10.
- Read the discount steps table: the 'Price after' column is that week's price.
Week one, 20% off: price 160.
Week two, a further 15% off: price 136.
Week three, a further 10% off: price 122.4.
Week four, a further 10% off: price 110.16, an equivalent 44.92% off the original.
The rates add up to 55%, but the real discount is 44.92%, because each extra markdown comes off the previous week's price. If you want to reach half price in the final week, you need bigger steps than these.
Where to stop: check each week against cost
Say each unit cost you 100. Enter each week's price with that cost in the Profit margin calculator:
160: profit 60, margin 37.5%.
136: profit 36.
122.4: profit 22.4.
110.16: profit 10.16, a margin of about 9.22%.
Add a fifth week at 10% off: price 99.14, below cost.
The calculator takes up to six discounts, so you can model a six-week plan. With two more weeks at 10% each, the price reaches 89.23 and the equivalent discount 55.39%, which is selling at a loss. You may accept that on purpose to shift stock that will not move, but know it before you get there.
Tips for a cleaner clearance
- Decide the lowest price you will accept in advance, and make the plan end at or above it.
- Advertise that stock is limited, not that prices drop every week, or everyone waits for the last price.
- Afterwards, look at why the stock piled up. Working out a reorder point with the Inventory reorder-point calculator helps you avoid ordering more than you need next time.
Common questions
Is each week's markdown taken from the original price or the previous week's?
The calculator applies each extra discount to the price left by the step before. If you want rates off the original, such as 20%, then 35%, then 50%, run each as a single discount on its own.
Does the order matter?
It does not change the final price, but it changes each week's price. A deep cut first means lower prices from the start.