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Managing Markdowns


Hesitant to markdown your products? Check out these best practices to know when and why you should mark those prices down.

Rule of thumb

The second sales drop on a product is the exact time you should lower its price. Customers vote on your products early, but will often wait until a better price becomes available. That’s why the timing of the first markdown is critical. Luckily, this first markdown can also have the smallest change in price (since customers will already have their eyes on it).

If markdowns are difficult for your business because you have an emotional attachment to the product, try viewing products as a pile of cash. That can help turn a subjective opinion into something more objective and help your profit margins.


Timing is another important factor. Some businesses markdown products at 60, 90, and 120 day increments.

Another way to look at markdown timing is with seasonal products. For instance, Halloween decorations aren’t full price at Christmas time. On the same page, marking down Halloween decorations for the first time a week before the holiday is just as wasteful. Customers will get better deals at other stores and this line of thought will hurt your return.

Managing inventory

Markdowns and inventory turnover are directly correlated. A lower inventory turnover means more markdowns. This helps to keep new, fresh, and better looking products in your store.


Items on sale should be placed at the front of your store, and items on clearance should be at the back. This doesn’t mean that the displays should be sloppy, though the same amount of time and care should be placed on all of your products.

What is your store’s policy for marking down products? Comment your best practices below.

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