Markdown ROI calculator: should you mark down now or hold?
What markdown ROI means
Markdown ROI is not the percentage off the ticket. It is the expected return on the decision to lower the price: the extra cash and margin a markdown produces versus the alternative. Usually the alternative is holding at full price and hoping demand catches up before the season ends.
The calculator uses a simple geometric depletion model. At each price, it sells a fixed share of the remaining units per week. Because it works on the remaining base, a higher weekly sell-through compounds quickly and the ending inventory falls fast — but only if the lift is real.
How to read the comparison
- 1
Set the inventory
Enter units, cost, ticket price, and weeks left in the season.
- 2
Set the two sell-through rates
Add the weekly sell-through you expect at full price and the rate you expect after the markdown.
- 3
Add salvage value
Use $0 for a write-off, or the outlet/jobber value if one exists.
- 4
Compare the paths
A positive net cash impact means the markdown is the better dollar decision.
Calculate markdown ROI
Defaults show 800 units with 8 weeks left. Change any figure to see how the two paths compare.
Share of remaining units sold per week
e.g. 0.30 for 30% off
Rate once the markdown is taken
$0 for a write-off; outlet value otherwise
Hold at full price
- Units sold
- 223
- Ending inventory
- 577
- Cash recovered
- $13,812.00
- Margin on recovered cash
- -4.3%
Markdown now
Sale price $34.30
- Units sold
- 512
- Ending inventory
- 288
- Cash recovered
- $19,001.60
- Margin on recovered cash
- 24.2%
A negative number means holding at full price is expected to recover more cash, usually because the lifted sell-through does not justify the price cut or the salvage value is high enough.
| Path | Weekly sell-through | Weeks | Units sold | Ending stock | Cash recovered |
|---|---|---|---|---|---|
| Hold at full price | 800 units × 4% weekly | 8 weeks | ~260 units sold | ~540 left | $12,740 + salvage |
| 30% markdown now | 800 units × 12% weekly | 8 weeks | ~650 units sold | ~150 left | $13,720 + salvage |
The markdown path sells more units and leaves less stock, but at a lower price. Whether it wins depends on the lift in weekly sell-through and the salvage value of the ending inventory.
When does each path win?
| Condition | What it means for the decision |
|---|---|
| Sell-through lift is small | The markdown mainly cuts price; holding is likely better unless weeks left is very low. |
| Salvage value is high | Ending inventory is less painful, so a faster markdown can be justified. |
| Weeks left is short | There is little time for full-price demand; a markdown that lifts velocity usually wins. |
| Markdown depth is deep | The deeper the cut, the more units must move to recover the same cash. |
Keep planning
- Plan a full markdown schedule
Model up to six markdown stages, with maintained margin and sensitivity bands.
- When to mark down inventory
The signals that should trigger a markdown decision.
- Sell-through rate calculator
Calculate the weekly sell-through inputs this comparison needs.
- Weeks of supply calculator
See how many weeks of inventory you have left at the current pace.
Answers
Markdown ROI questions
Move from one decision to a season plan
The planner lets you model up to six markdown stages, compare scenarios side by side, and export a printable decision memo or CSV.
Free, no sign-up, with CSV export and a shareable link. Pro ($29/mo) saves named season plans, imports inventory CSVs, and prints a decision memo.