The Math Behind Clearance Markdowns
Every retailer ends up with dead stock eventually. The goal of a clearance sale isn't to maximize profit—it is to stop the bleeding and free up trapped cash. Our Clearance Sale Calculator helps you find the optimal markdown price to move inventory without taking an unnecessary loss.
Understanding Holding Costs
Inventory sitting in a warehouse isn't just taking up space; you are paying rent, insurance, and utilities to store it. These are 'holding costs.' The longer a slow-moving item sits, the more it degrades your overall net profit. Aggressive clearance pricing stops this slow leak.
The Break-Even Liquidation
When marking down items to 40% or 50% off, your target is often simply to break even on the Cost of Goods Sold (COGS). Input your manufacturing and freight costs into our tool, and it will instantly show you the maximum discount percentage you can offer before you start paying customers to take the product away. Double-check your numbers using our Break Even Calculator.
Frequently Asked Questions (FAQ)
If inventory hasn't turned over in 90-120 days, it is tying up capital and taking up warehouse space. It is better to liquidate it at cost and reinvest that money into a faster-selling product.
Yes, if the inventory is completely dead. Recouping 60 cents on the dollar is better than holding an asset that will eventually have to be thrown away or donated.