Retail Pricing Pros Share How They Time Markdown Calls for Healthy Margin
Getting markdown timing wrong can turn profitable inventory into margin-draining dead stock. Industry pricing professionals reveal the specific signals they monitor to trigger price reductions that protect profitability while maintaining sell-through velocity. These strategies help retailers strike the balance between waiting too long and discounting too early.
Clear Fast on Storage Costs
We had 4,200 units of a Halloween-themed pet costume sitting in our warehouse in mid-November. The brand founder wanted to hold them until next October. I told him that was financial suicide.
The signal that changed everything was our storage cost math. Holding those units for eleven months meant paying $0.47 per unit per month in warehouse space. That's $5.17 per unit in storage alone before we sold a single costume. The wholesale cost was $8.50. We'd be underwater before accounting for any additional markdown next season or the risk that styles change and nobody wants last year's design.
I pushed for aggressive clearance. We dropped the price 70% and moved 3,800 units in three weeks through their email list and a quick Amazon Lightning Deal. The remaining 400 we donated for a tax write-off. The brand recovered $4.20 per unit on average after fees. Not great, but infinitely better than the alternative.
Here's what most e-commerce founders miss in that moment: they anchor on the product cost and think a 70% discount is throwing away money. But you already spent that money. The real question is opportunity cost. That warehouse space could hold faster-moving inventory. That capital could fund the next product launch. And customer goodwill from a great deal beats dead inventory every time.
The brands I've seen win at seasonal inventory make the markdown decision before the season even starts. They set a date, usually 30 days after peak, and automatically trigger pricing tiers. No emotion, no hoping for a miracle. One DTC candle brand we work with at Fulfill.com clears 95% of their seasonal SKUs within 45 days of the holiday because they plan the exit before planning the entrance.
Your inventory is either making you money or costing you money. There's no neutral gear in e-commerce. The moment something stops selling at full price, the clock starts ticking on how much it'll cost you to keep pretending it will.
Use Modest Markdown as Repeats Fade
I don't treat price changes as the first lever—I look at demand signal strength. If interest is still consistent but timing is off, I hold price; if engagement is there but conversion is slipping, I'll test a small adjustment; and if both attention and conversion drop, I move quickly to clear so it doesn't drag the rest of the menu down. At NYC Meal Prep, we had a seasonal dish that looked strong on social but started getting fewer repeat orders week over week—the clearest signal wasn't views, it was repeat intent flattening—so we chose a targeted markdown for a short window rather than a full clearance. That preserved perceived value while still moving inventory efficiently, and more importantly, it kept the rest of the offering from being affected by a single slowing item.
Speed Sell Down when Clicks Decline
We decide by data on shopper behavior. In seasonal retail price is one factor while timing confidence and urgency signals matter more. We track sell through pace season timing repeat visits and friction points in the journey. If interest holds we stay steady and if urgency falls we move to faster clearance when needed.
We saw an item slow while overall trend interest still rose in the category. The signal was lower clicks from collection pages to product page. This showed the issue started before the product page from weaker appeal in listing view. We cleared it faster since the trend stayed strong but the item appeal dropped in the market.
Liquidate before Expiration Dates Hit
At MacPherson's Medical Supply, we deal with seasonal fluctuations all the time. Flu test kits, allergy supplies, even things like humidifiers have their peak seasons. When an item starts slowing down, I look at a few things: how much inventory we have left, whether the product will be viable next season, storage costs, and whether there's a new model or version coming.
The biggest signal for me is the sell-through rate compared to where we should be at that point in the season. If we're at 70% through flu season but still sitting on 60% of our flu test kit inventory, that's a red flag.
Last year, we had this exact situation with a batch of rapid flu test kits. It was late February, and flu season was winding down faster than expected. We had about 200 units left that weren't moving. I had three options: hold the price at $12.99 per kit, take a small markdown to $9.99, or clear them aggressively at $6.99.
The signal that made my decision was the expiration dates. These kits had a shelf life, and most of our stock would expire by October. That meant we couldn't just hold them for next flu season. Storage wasn't the issue. It was the product viability.
I went with the aggressive clearance at $6.99. We pushed them out through our email list and website with a "stock up for the tail end of flu season" message. Sold through everything in about two weeks.
Could we have made more margin with a slower approach? Maybe. But expired inventory is a total loss. I'd rather take a smaller profit than write off dead stock. That's the thing about seasonal medical supplies. You have to respect the calendar and the expiration dates. They don't care about your margin goals.
Now I always check expiration dates before committing to seasonal buys. That one decision changed how we approach flu season ordering entirely.
