Markdown

A markdown is a reduction in a product's selling price. Retailers use markdowns to clear slow-moving or seasonal stock, respond to competition or run promotions, while tracking the effect on margin.

A markdown changes the price charged to the customer, whether temporarily for a promotion or more permanently to clear a line. Decisions usually consider stock age, demand, seasonality and the time left to sell. Reducing prices may accelerate sales, but the benefit should be compared with the lost margin and any stock that remains.

For example, a retailer could reduce a £50 coat to £35 near the end of the season. That is a 30% reduction from the previous selling price, not from its buying cost. Sell-through rate and markdown optimisation help decide whether the reduction is clearing the intended stock effectively.