Choose one batch and objective. Compare contribution at each price, likely buyers, cash recovery, a confirmed supplier return and an approved salvage value. In the fictional example, 17 sales at ₹850 or 31 at ₹750 approximately replace ₹3,700 from ten full-price sales; that target is infeasible if only ten likely buyers remain.
An old item does not always need a lower price
A style can sell slowly because its main sizes are missing, it is hard to find on the rack or the weather has changed. Check the reason before putting the whole category on sale. Reducing the price of sizes nobody needs may leave the same pieces unsold.
Shopify's markdown guidance considers excess inventory and selling pace when discussing price reductions. The owner still needs to choose a price and review the result. No tool can promise how many customers will buy at the new price.
See whether time is running out
In this fictional example, the store received 80 seasonal dresses and sold 30, with no returns or transfers. Fifty remain. The simple batch sell-through is 30 ÷ 80 = 37.5%. Use the same batch and period when comparing styles; different systems may define sell-through differently.
Ten dresses sold in the last two weeks. At that pace, another 15 would sell in the three weeks remaining, leaving 35. That is a scenario using five pieces a week, not a forecast with proven accuracy. A festival, weather change or promotion could alter demand.
Compare the price options in rupees
The following amounts are illustrative and tax-exclusive. Assume each dress cost ₹600 and each sale adds ₹30 of packing and selling cost.
| Selling price | Less product cost | Less extra selling cost | Amount left per piece |
|---|---|---|---|
| ₹1,000 | ₹600 | ₹30 | ₹370 |
| ₹850 | ₹600 | ₹30 | ₹220 |
| ₹750 | ₹600 | ₹30 | ₹120 |
Selling ten pieces at ₹1,000 leaves ₹3,700 after these costs. Matching that amount at ₹850 requires 17 pieces: 17 × ₹220 = ₹3,740. At ₹750 it requires 31 pieces: 31 × ₹120 = ₹3,720. A lower price must move enough additional stock to serve that particular objective.
Cash recovery and contribution are different objectives. Clearance can release money even when it does not match the contribution of full-price sales. Record which objective the owner is choosing, including any storage or future-season alternative.
Try the smallest useful change
- Confirm physical availability in the sizes advertised.
- Move a poorly displayed style before assuming its price is wrong.
- Consider a transfer if another shop has evidence of demand.
- Choose a defined set of pieces, price and review date for a markdown.
- Stop counting new receipts with the old batch when judging clearance.
Keep the original ticket price, actual selling price and units sold. A rise in pieces sold can conceal a fall in the amount left after costs. Record returns too, so a short promotion is not declared successful before its outcome is known.
Decide what the next review will change
Before starting, write down the remaining quantity you hope to reach and the date you will reassess it. If the test does not move stock, examine size mix and customer response before applying another automatic reduction.
A simple sheet with the style, remaining variants, price, units sold and money recovered is enough to make the next decision less dependent on memory.
ACCA distinguishes contribution from profit after fixed costs. The worked amounts here cover only the costs explicitly listed; do not treat an omitted cost as zero.
Choose between markdown, return and salvage
Start with the number of likely buyers only as a stated scenario. If ten likely buyers remain, neither 17 sales at ₹850 nor 31 at ₹750 is feasible on that assumption. A lower price may recover more cash than no sale, but it cannot meet the full-price contribution comparison without enough additional units.
Compare three paths for the same batch: sell now at the proposed price, use a confirmed supplier-return value, or retain the pieces at an owner-approved salvage value after storage and handling. Use documented values. Do not invent a next-season value or treat it as cash already received.
| Decision | Price or recovery per piece | Listed cost basis | Units needed for ₹3,700 contribution | Evidence still needed |
|---|---|---|---|---|
| Keep ₹1,000 price | ₹1,000 | ₹600 product + ₹30 sale cost | 10 | Demand and time remaining |
| Mark down to ₹850 | ₹850 | Same listed costs | 17 | Likely additional buyers |
| Mark down to ₹750 | ₹750 | Same listed costs | 31 | Likely additional buyers |
| Supplier return or salvage | Use confirmed value | Add transport, storage and handling | Not comparable until value is known | Written return terms or approved salvage basis |
Link every later markdown to the original batch and prior price. Record partial refunds and returns against the sale that generated them. Review realised margin with the clothing-margin guide; this reporting sample does not estimate price elasticity or choose a markdown automatically.
Questions you might ask
Should I discount every slow-moving clothing item?
First check sizes, placement and season relevance. A markdown addresses price; it does not fix every reason a style is not selling.
How do I compare two markdown prices?
Calculate the amount left per piece at each price, then the additional units needed for your chosen objective. Keep cash recovery separate from contribution.