The rail has forty pieces on it that were ordered in March and it is now September. Everyone tells you to discount. Almost nobody tells you how much, or when, or what it costs you, and that is the part that decides whether the season made money.
A markdown is not a failure. It is the last stage of a plan you should have made when you bought the stock.
Know the number you are protecting
You cannot judge a discount without knowing what the garment cost you. Not the retail price with a percentage off it: the actual landed cost, including the shipping and the duty that came with it.
Record that as the cost price on the product. It is not shown to customers and it changes how every later decision reads:
- It tells you the floor. Below cost you are buying cash with margin, which is sometimes right and should always be deliberate.
- It tells you what a discount really costs. Twenty per cent off a garment with a 60% margin is a much smaller decision than twenty per cent off one with a 30% margin, and they look identical on the shop front.
- It lets the shop report on profit rather than revenue. A record week that shifted only the thin-margin lines is worth knowing about. Shop analytics is where that surfaces.
Stage the markdown instead of opening at half price
The instinct at the end of a season is to go straight to 50% because that is what clears. It also gives away the customers who would have paid 20%, and there are more of them than you think.
A staged markdown captures them on the way down:
- First reduction, 15 to 20%. Early, while the weather still suits the garment. This clears the pieces that were only ever a bit overpriced.
- Second, 30 to 40%. Once the season has turned. This is where the volume usually is.
- Final, 50% and beyond. Only for what is left, and only if the space is worth more than the margin.
Each stage should have a date attached before you start, not decided in the moment. Discounting is emotional when the rail looks full, and a plan written in August is calmer than a decision made in October.
Use was-now pricing, honestly
A compare-at price sets the original alongside the current one so the reduction is visible without shouting. It is the most effective piece of sale merchandising there is, and it is also regulated in most markets: the "was" price generally has to be a price you genuinely charged, for a meaningful period, reasonably recently.
That rule is not an obstacle. Staged markdowns satisfy it naturally, because the garment really was that price last month. Inventing a "was" you never charged is the version that gets you a fine and a screenshot on social media.
Prefer a code over a blanket sale when you can
A shop-wide sale banner discounts everyone, including the customer who arrived to buy at full price. A coupon code discounts the people you aimed it at.
Codes are better in three situations: clearing one category rather than the shop, rewarding your email list before the public sale, and winning back somebody who left a full basket. That last one is worth setting up properly, and the reasoning is in Why People Abandon Checkouts, and How to Win Some Back. Coupon setup is covered in coupons, reviews and returns.
Two guardrails. Put an expiry on every code, because a code with no end date will still be working in two years. And do not let a code stack with a sale price unless you have worked out what the combination costs.
Let the sizes die gracefully
By the end of a run a garment exists in one size, and it is rarely a popular one. A product page whose only available option is XS annoys most people who land on it.
Retire the style rather than leaving it as a monument. If the last few pieces are worth selling, group them into a clearance category where the customer arrives already expecting a thin size run. The mechanics are the same variant stock covered in Sizes and Colours Without Listing Forty Products.
Decide what the space is worth
The real cost of unsold stock is not the money tied up in it. It is the rail, the shelf, the photograph slot and the attention it takes from the new season. Once a garment is costing you a position rather than just cash, clearing it at any price is usually the right answer.
That is a judgement, not a formula. What makes it a judgement rather than a guess is knowing the cost price, having the dates written down, and being able to see which lines actually earn. The clothing store website builder page shows the shop side of it, set up your shop covers the settings, and you can start for free with this season before you plan the next one.