twelfth · Glossary · Pricing
Markdown
A markdown is a permanent price reduction on a product, usually to sell stock that is not moving at its original price.
What it means for retail and category teams
Unlike a promotion, which is temporary and usually planned or supplier-funded, a markdown lowers the price for good and is typically taken on seasonal, aged or overstocked lines. Teams decide when to mark down, by how much and in how many steps. The first markdown is usually the cheapest, because the stock still has time to sell before it loses more value.
Why it matters
Markdown is often where a season's margin is won or lost. Taken early and in measured steps, it recovers more of the stock's value; taken late, it tends to need deeper cuts into a season nobody is buying for. A predictable markdown pattern also teaches shoppers to wait, which turns a clearance tool into a discount on demand that would have paid full price.
Illustrative example
The business and figures are illustrative, not customer data
A fashion retailer has 1,000 units of a summer jacket in week six of a twelve-week season, with sell-through at 25% against a plan of 45%. A 20% markdown now is expected to clear most of the stock by season end. Waiting four more weeks would likely need a 50% cut to clear the same units, giving away far more margin across the remaining stock.
Related terms
Related on twelfth.ai
- twelfth for fashion & apparel
Sell-through by size and option, markdown candidates ranked by the cost of waiting, and a record the next range review can use.