Clearance Markdown Calculator

Compare against holding cost, not the original price.

Written and maintained by Mohit PatelLast checked August 4, 2026How we build these

Currency

Units to clear

Unit cost

Original price

Markdown

Share that will sell at this markdown

Storage per unit per month

Months if you hold instead

Cash recovered

$9,744

336 units at $29.00

Markdown price$29.00

Contribution per unit$11.00

Units left unsold144

Storage avoided$864

Still above cost at $11.00 per unit, and clearing avoids $864 of storage. Clearance decisions should compare against holding cost, not against the original price, that money is already spent.

How the Clearance Markdown Calculator works

Clearance decisions should compare against holding cost, not against the original price, that money is already spent. Selling below cost is frequently correct when the alternative is storing stock that will not improve with age.

Also known as: clearance pricing calculator · how much to mark down · end of line pricing

The markdown decision is against holding, not against full price

The instinct is to compare the discounted price against the full price and see a loss. The correct comparison is against what happens if you hold the stock: continued storage cost, continued capital tied up, and a declining probability of ever selling at full price.

Run it. A unit with £8 of remaining margin costing 3p a day to store, with a realistic 200 more days on the shelf before it sells at full price, will accumulate £6 of storage in the meantime. Discounting by £4 now captures £4 of margin instead of £2, and releases the space and cash immediately.

The sunk cost is the trap. What you paid for the stock is irrelevant to the decision; only what you can now get for it and what it costs to keep it matter. Sellers holding out for a price that reflects their original cost are making the classic error, and it is expensive because the holding cost accrues while they wait.

Progressive markdown

The standard approach is a ladder: 20% off, then 30%, then 50%, then whatever clears it, with each step held for a defined period.

The advantage is that it finds the price that clears without giving away more than necessary. Some stock moves at 20% and never needs the deeper cut.

The discipline is in holding to the schedule. Markdown ladders fail when the steps are skipped because the stock is not moving fast enough, or delayed because someone hopes it will move at the current step. Setting the dates in advance and following them removes the judgement, which is the point.

Timing, and the cost of waiting

Marking down early recovers more per unit and feels premature. Marking down late recovers less and feels justified. The arithmetic favours early in nearly every case.

Seasonal goods make this starkest. Christmas stock marked down in early December clears at 30% off; the same stock in January clears at 70% off if at all. The difference is entirely timing.

The general principle is that the value of stock declines continuously and the decline accelerates near the end of its season or product cycle. Which means the first markdown should come when the sell-through rate falls below what is needed to clear the stock by the end of the window, not when the season ends.

Where to sell it

Marking down on your own site is simplest and it trains your own customers to wait for markdowns, which is the cost.

Separate outlet channels solve that: an outlet section, an eBay account, or a marketplace listing under a different presentation. The stock clears without the main channel's pricing being undermined.

Liquidation to a jobber recovers the least, typically 10% to 25% of retail, and it is fast and complete. For genuinely dead stock occupying space, that is frequently the right answer, and it is usually reached later than it should be because the recovery rate looks so poor next to a retail price that was never going to be achieved.

Avoiding the next one

Clearance is the visible cost of a buying error made months earlier, and the useful output of a markdown cycle is the analysis of what caused it.

The usual causes are few: over-ordering on a forecast that was optimistic, buying a range too broad for the demand, missing a seasonal window through late delivery, or a product that simply did not work.

Recording the cause against each clearance line, and reviewing them before the next buying round, is what turns a cost into information. Businesses that clear stock every season without ever asking why tend to clear the same proportion every season indefinitely.

Where to go next

The Clearance Markdown question rarely arrives on its own. These are the ones that usually come with it:

Flash Sale Profit Calculator — Demand pulled forward is the hidden cost.
Storage Days Cost Calculator — Physical storage is the smallest part.
Dead Stock Calculator — Value trapped in stock that is not moving.
Etsy Fee Calculator — Every Etsy fee on one sale, itemised.

Not financial advice. Marketplace fees change, and they vary by country, plan and seller status. Every rate here is an editable default, not a quoted price, check the platform's current fee schedule before you price a product against it. This is not tax or business advice.

Frequently asked questions

How deep should a markdown be?

Deep enough to clear within a defined window. A shallow markdown that clears a fifth of the stock leaves you making the same decision again in three months, having paid three months of storage.

Should I ever sell below cost?

Yes, when the alternative is holding it indefinitely. The cost is sunk; the only live question is which route recovers most cash net of the storage avoided.