Markdown
Also called: price reduction
What is Markdown?
A markdown is a permanent reduction in an item's selling price, usually to clear slow-moving, seasonal or near-expiry stock. Unlike a promotional discount, the price does not go back up.
Why Markdown matters
Markdowns recover cash from stock that would otherwise become dead. Taken early they cost a little margin; delayed until the goods are unsellable, they cost the entire purchase.
Markdown formula
Markdown % = (Original price − New price) ÷ Original price × 100
Cumulative markdowns should be measured against the original price, not the last reduced one.
How Markdown works in practice
Set an ageing rule per category — for instance, review anything unsold after 60 days — and mark down in steps rather than waiting for a clearance event. Record the markdown so the margin report reflects reality.
Frequently asked questions
As soon as the ageing report says it will not sell at full price. Waiting reduces what the goods can still fetch.