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One demand curve, one ticket, one owner. The right level for most seasonal markdown plans and the level this calculator is built around.
Retail markdown planning: the process behind the price breaks
Markdown planning is an inventory plan written in prices. It starts at the buy with an initial markup and a markdown reserve, runs through a season calendar of scheduled breaks, and is judged at the end on two things: maintained margin and how much stock you carried out of the season. This guide walks the process, the calendar, and the numbers that set depth and timing.
How do retailers plan markdowns?
Planned markdowns are decided before the season, not during the panic. At plan time the buyer commits to an initial markup, an expected weekly sell-through curve, an ending-stock target, and a markdown reserve — the share of sales assumed to happen at reduced prices. The reserve is what lets you price high enough at the start to still hit the season margin target after the breaks land.
In-season the work is monitoring, not improvising. Weekly sell-through against plan and weeks of supply against weeks remaining tell you whether the next scheduled break is still the right depth on the right date. When the gap is material, you re-forecast the remaining stages rather than adding an unplanned promotion.
The three numbers that set every break
Weeks of supply — remaining units divided by current weekly units. If it exceeds the weeks left in the season, the plan is already behind. Sell-through lift — how much a given depth actually raised weekly units last season at this class. Maintained margin floor — the margin below which selling the unit stops being better than holding or liquidating it.
| Season week | Action | Owner |
|---|---|---|
| Pre-season | Set initial markup, sell-through curve, markdown reserve, ending-stock target | Buyer / planner |
| Weeks 1–4 | Full price. Track weekly sell-through against the curve; no action unless badly off | Planner |
| Week 4–6 | First break, typically 15–25%. Early enough that demand still exists | Planner / pricing |
| Weeks 7–9 | Read the lift. Re-forecast remaining stages against weeks of supply | Planner |
| Week 9–11 | Second break, typically 30–40%. Depth follows remaining units, not the calendar | Pricing |
| Final 2–3 weeks | Clearance break sized to clear residual stock before the exit date | Pricing / stores |
| Post-season | Compare maintained margin and ending units against plan; feed rates back into next season | Planner |
A typical shape, not a rule. Depth and dates should follow your own sell-through history; the calculator exists so you can test alternatives before committing tickets.
Planning levels
Plan by SKU, category, store, or channel?
Pick the level where the demand curve is coherent and someone actually owns the outcome.
SKU or style
High value or terminal
Worth the extra work when unit cost is high, the item is end-of-life, or a write-off is possible. Size and colour breaks often need separate treatment late in the season.
Store or channel
Only when it pays
Split pricing when sell-through genuinely differs by location or channel, and only if the ticketing labor and customer confusion are worth the margin recovered.
The markdown planning process
- 1
Set the season targets before pricing anything
Units, cost, initial ticket, season end date, ending-stock target, and the maintained margin you need. Without a target ending inventory there is no way to say whether a plan worked.
- 2
Build the expected sell-through curve
Weekly percentage of remaining units at full price, and the lift you expect at each discount depth. Last season's actuals beat any industry rule of thumb.
- 3
Reserve the markdown dollars
Decide up front what share of sales you are willing to give back in reductions, and price initial markup so the plan still clears your margin floor after the reserve is spent.
- 4
Schedule the breaks and test alternatives
Lay in dates and depths, then run the alternative cadences as scenarios. Compare maintained margin, ending units, and cash recovered on the slow case of the sensitivity band.
- 5
Monitor weekly, re-forecast on drift
Track sell-through versus plan and weeks of supply versus weeks remaining. Move the next break when the gap persists for two weeks, not after a single soft week.
- 6
Review the season and reuse the rates
Compare achieved maintained margin and ending units against plan, then feed the observed sell-through lift at each depth back into next season's assumptions.
Keep planning
- Compare markdown scenarios in the calculator
Turn the plan into numbers: maintained margin, ending stock, cash recovered, sensitivity band.
- Markdown schedule template
The same plan as a printable, spreadsheet-style worksheet for the buy meeting.
- When to mark down inventory
The triggers that decide whether a scheduled break moves earlier.
- Sell-through and markdowns
How to build the weekly sell-through curve the plan depends on.
Answers
Markdown planning questions
Put the plan through the numbers
The calculator models up to six scheduled breaks with editable sell-through per price period, and reports maintained margin, ending stock, and cash recovered as a range.