Inventory glossary
What is Markdown?
Markdown is a reduction in the selling price of a product, used to move stock that is not selling at full price.
Markdowns matter because slow-moving stock ties up cash and shelf space. A small store that cuts prices early on items that are not selling avoids bigger losses later, like paying storage costs or writing the stock off completely.
Use markdowns as a planned tool, not a last resort. Decide ahead of time which SKUs get marked down and when, based on how fast they are actually selling compared to how much you have on hand. This keeps the decision based on numbers rather than panic.
Example
A candle store has 100 units of a seasonal scent priced at $20. After eight weeks it has only sold 30 units and the season is ending. The owner marks it down to $12 to clear the remaining 70 units before it becomes dead stock.
Common mistakes
- Waiting too long to mark down, so the stock sits for months before the price drops.
- Marking down everything the same amount instead of looking at which SKUs are actually slow.
- Not tracking markdown impact on gross margin, so the real cost of clearing stock is unclear.
Markdown and SteadyShelf
SteadyShelf does not manage pricing or markdowns, but its sales forecasts can show you early which variants are falling behind so you can decide to mark them down before they pile up.
SteadyShelf is launching on the Shopify App Store. Join early access to get the install link first.
Related terms
Dead stock · Slow-moving inventory · Clearance inventory · Sell-through rate · Excess inventory
FAQ
Does a markdown always mean a loss?
Not always. If the item still sells above its unit cost, the store still makes a profit, just a smaller one than planned.
How do I know when to mark something down?
Compare how fast it is selling against how much is left and how much time you have to sell it. If current sales speed will not clear the stock in time, it is a candidate for a markdown.
Let SteadyShelf do this math for every SKU
Order-by dates per supplier, seasonal forecasts and draft POs for your Shopify store. $29/month after a 30-day free trial.
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