Markdown cadence is the schedule of rules that sets when a price drops, how far it drops, and when markdowns stop. A working cadence ties every step to the item's aging bucket: healthy, slow-moving, overstock or dead stock. Each markdown ladder ends on a fixed exit rule, and whatever hasn't sold leaves the store through liquidation, donation or write-off.
What This Guide Covers
- What markdown cadence is
- Why cadence sets your cash position
- The four aging buckets
- Timing: when to cut and how often to review
- Depth: how far to cut in each bucket
- Exit rules: the five triggers that end markdowns
- Where Cash Margin Partners fits
- A worked example with real numbers
- Benchmarks and what good looks like
- The approaches compared
- Start Here: five first steps
- Frequently asked questions
What Is Markdown Cadence in Retail?
Markdown cadence is the repeating calendar of price decisions a store makes on aging inventory. It covers four things: when to cut, how deep to cut, how long to wait between cuts, and when to stop cutting.
A markdown is a permanent price reduction on a specific item, taken to raise its sell-through. Sell-through is the share of units received that sold in a period. A promotion is temporary and usually ends with the item back at full price.
An inventory markdown strategy is the larger plan that cadence sits inside. The strategy decides which items qualify for a markdown at all. The cadence sets the dates and the depths once an item qualifies.
The four parts of a working markdown cadence
- Timing: the date of the first cut and the length of each window between cuts.
- Depth: the size of each cut, measured as a percentage off the original retail price.
- Exit rules: the preset conditions that end markdowns and send remaining units out of the store.
- Review rhythm: the fixed day each week when every SKU gets sorted again.
A store that sets timing and depth but skips exit rules ends up with a permanent clearance rack. The same twelve items sit on it in March and again in June, each wearing its third sticker.
Why aging buckets beat one store-wide markdown date
A store-wide schedule marks everything down on the same date, usually at season close or before a count. That treats a candle selling 12 a month the same as a bookend with no sale in seven months.
Aging buckets fix that.
Each SKU gets sorted by how recently it sold and how many months of supply sit on hand. The bucket then sets the depth and the exit rule. Two SKUs in one category can get opposite treatment in the same week.
Your Markdown Calendar Says "Next Month." Your Rent Is Due on the First.
Markdown cadence sets an independent retailer's cash position by deciding how fast a slow item's cost turns back into money. Every week a slow SKU sits at full price, its cost stays on the shelf. Rent, payroll and next season's buy wait on it.
I call the place where that cost sits the back room, even when the stock is out on the sales floor. The back room is where cash goes to sit down and stop moving. A markdown cadence is the schedule for getting it up again.
Key data point
U.S. retailers held $839.0 billion of inventory in July 2026, seasonally adjusted, per the Census Bureau's Manufacturing and Trade Inventories and Sales report. The retail inventories-to-sales ratio was 1.27, so stores held inventory worth about 1.27 months of sales.
What a slow SKU costs every month it waits
A slow item costs four things to hold: rent share, insurance, the cash its cost ties up, and continued aging. 9 Markdown Tactics That Move Dead Stock counts carrying cost the same way, next to the discount.
Take a hypothetical 1,400-square-foot gift shop paying $8,400 a month in rent, or $6 per square foot. A 20-square-foot planter display carries $120 of that rent every month, whether the planters sell or not.
At three planters a month, 52 planters take about 17 months to sell through. That's roughly $2,080 of rent share against $728 of planters at cost.
Timing matters more than depth for exactly this reason. A sensible markdown taken five months late has already spent $600 of rent share on the same 52 planters.
The cost that never shows up on the P&L
Cash tied up in planters can't fund the reorder on the candle that sells 12 a month. The slow SKU costs rent, and it also starves the SKU that would have paid the rent.
To size your own back room before setting a single price, try the free trapped-cash estimate. It takes under two minutes, returns a directional dollar range and doesn't ask you to sign up. This directional questionnaire gives a benchmark range; use a supported connection or reviewed item-level upload for SKU-level analysis.
The Four Aging Buckets That Decide Every Markdown
An aging bucket is a classification that sorts each SKU by how recently it sold and how much supply sits on hand. This guide uses four recovery states: healthy, slow-moving, overstock and dead stock. The CMP workspace also separates stockout risk and data incomplete, protecting those items from recovery actions.
- Healthy stock is inventory whose sell-through and depth both support the cash it holds. It gets no markdown.
- Overstock is inventory that sells at a normal pace for its category, in a quantity that pace won't clear soon. The product works, and the buy quantity was the mistake.
- Slow-moving inventory still sells, but below the rate that justifies its shelf space and the cash it holds.
- Dead stock is inventory with no verified sales over the measured window. CMP's default window is six months for non-seasonal goods, per our definition of dead stock in retail.
A classic aging report counts days since each item was received. For markdown decisions, days since the last sale and months of supply tell you more. A SKU received 200 days ago that sold yesterday belongs nowhere near the clearance rack.
The illustrative rule set I use to sort SKUs
The thresholds below are my illustrative starting points, and you should calibrate them to your categories. No industry study stands behind them.
Months of supply equals units on hand divided by average monthly units sold over the last 90 days. Category median pace is the median 90-day units sold per SKU in that category, from your own report.
- Too new to judge: received in the last 60 days. Leave it alone until it has had a fair selling window.
- Dead stock: units on hand and no sale in 180 days or more.
- Past the 90-day line: units on hand and no sale in the last 90 days. It's still slow-moving on paper, and the exit rules apply now.
- Healthy: four months of supply or less.
- Slow-moving: more than four months of supply, with a 90-day pace below half the category median.
- Overstock: more than four months of supply, with a 90-day pace at or above half the category median.
Run the tests in that order and stop at the first match. Every SKU lands in exactly one bucket, and the bucket hands it a first action.
The four-month line comes from CMP's definitive guide to excess inventory. It says to cut or justify anything above four months of supply on a non-seasonal item. For seasonal goods, swap four months for the weeks left in the selling season.
| Bucket | Sorting test (illustrative) | First action | Markdown depth | Exit trigger |
|---|---|---|---|---|
| Healthy | Four months of supply or less | Protect price and reorder | None | None; sorted again weekly |
| Overstock | Over four months of supply, pace at or above half the category median | Pause reorders | None at first; multi-buy on surplus near a deadline | Surplus line or calendar |
| Slow-moving | Over four months of supply, pace below half the category median | Move or bundle for 14 days | 20% to 30% off, then about 50% off | Two steps done, net-cash test, calendar |
| Past the 90-day line | No sale in 90 days, sold within 180 | Exit, with one optional terminal price | One terminal price at most | The 90-day line itself |
| Dead stock | No sale in 180 days or more | Exit | None | Already fired |
Why the 90-day line matters more than the 180-day label
The 180-day window counts dead stock for the balance sheet. The 90-day line decides when markdowns have stopped being the right tool for a SKU.
Our comparison of markdown vs liquidation sends items with sales in the last 90 days to the markdown side. Zero-sellers go to the liquidation side. A SKU that waits out days 91 to 180 at full price adds three more months of rent share.
My position: don't wait for the dead stock label. By the time a SKU earns it, the back room has charged it six months of rent.
Operator tip
Sort by SKU and variant, and never stop at the category total. A category average hides the one size or color carrying the whole problem. Our step-by-step inventory aging report guide covers the export and the sort.
Timing: When to Take the First Markdown and How Often to Review
Take the first markdown while the item's season is still running and the SKU still has sales in the last 90 days. Demand is what a markdown works on, so the cut has to land while customers are still buying the item.
The weekly review: one fixed day, every SKU
Pick one weekday and run the aging sort every week, from the same export. A 21-day markdown window then gets three readings, enough to tell a slow start from a dead end.
Make price changes on that same day. Changes spread across the week invite instinct, and instinct tends to show up on a slow Saturday afternoon.
The 14-day move before any price change
Before the first cut, move a slow-moving item for 14 days at full price. Try a better floor position, a front table or an endcap. Some items are placed badly and priced fine, and the move tests that for free.
A bundle with a healthy partner product belongs in the same 14 days, where one exists. A $34 candle sold next to a $120 throw is a different offer from a candle alone on a shelf.
The 21-day markdown window
Each markdown step runs 21 days before the next decision. Three weeks covers three weekends and three weekly reviews, enough to read a trend in a small store.
Put the next decision date on the calendar before the first price changes. A markdown with no end date becomes the new regular price by default.
Counting back from the season close
For seasonal goods, the whole ladder has to finish before the season does. The move takes 14 days and two markdown windows take 42, so the ladder needs 56 days.
The start date equals the season close minus 56 days. For a holiday line whose season ends December 24, the move starts October 29.
If today is already past that date, skip the move and start at the first cut, or go straight to the exit. The calendar trigger in the exit rules covers the units that run out of season.
Former-price rules that affect markdown timing
Federal guidance cares how long the original price ran before you advertise a cut from it. The FTC's Guides Against Deceptive Pricing describe a legitimate former price as one offered to the public regularly "for a reasonably substantial period of time."
Some states set a clock. California Business and Professions Code section 17501 limits former-price ads. The former price must have been the prevailing market price within the prior three months, or the ad must state the date.
A SKU that has sat at a markdown price for months may no longer support a "was $36" sign. Check your state's rules with your attorney before advertising comparison prices.
Operator tip
Shopify shows a markdown as a sale when the compare-at price field holds the original price, per Shopify's sale pricing guide. The price field then holds the new one. Shopify supports bulk editing across products and variants, which keeps every price change on your one review day.
Depth: How Deep to Cut in Each Aging Bucket
Markdown depth should follow the bucket. Healthy stock gets no cut, and overstock gets a reorder pause first. Slow movers get a two-step ladder, and dead stock skips the ladder entirely.
Why the first cut has to be deep enough
A first cut of 20% to 30% off original retail is the range CMP's markdown guidance uses. A 10% cut usually changes nothing, because the customer who passed at $36 still passes at $32.40.
Key insight
Stephen Smith and Dale Achabal tested clearance pricing models at three retail chains, published in Management Science in 1998. Per INFORMS, they concluded "the initial clearance markdowns should be deeper than buyers are accustomed to taking."
They also found excessive end-of-season markdowns should be avoided, with leftovers donated or discarded. Those are chain results, and a single store's data is noisier, so take the direction as the lesson.
The two-step ladder for slow-moving inventory
- Days 1 to 14: move or bundle the item at full price.
- Day 15: take the first markdown, 20% to 30% off original retail, at the item level.
- Day 36: check the window. If it sold at least 30% of the units it started with, hold the price for one more 21-day window.
- Second markdown: if the window missed 30%, cut to about 50% off original retail on day 36. After a hold, the cut lands on day 57.
- Hard stop: the ladder ends 21 days after the second markdown, on day 57 or day 78. Remaining units exit.
The 30% hold test is my illustrative rule. A window that sells at least 30% of its starting units is working. Deepening a working price gives margin away on units already selling.
The second step at about 50% off matches our markdown vs liquidation worked example, which cut a $75 item to $37.50. The rule against a third step comes from our 9 markdown tactics piece: stop discounting after two markdowns fail.
The margin math behind each markdown step
Every markdown trades margin per unit for speed. The units needed to earn the same gross margin dollars equal full-price margin divided by marked-down margin.
Take a planter that costs $14 and retails at $36, earning $22 of margin. At 25% off ($27), margin falls to $13, so you need about 1.7 times the units to earn the same dollars.
At 50% off ($18), margin falls to $4, and you'd need 5.5 times the units. At that depth the goal is cash recovery, and the margin is mostly gone.
That's why the second step is the last in-store step. Below about half off, your shelf price sits close to a bulk offer. The bulk offer clears every unit at once.
Depth for overstock: fix the purchase order first
Overstock usually needs a reorder pause before it needs a price cut. The SKU already sells at a normal pace, so stopping the next purchase order lets that pace work through the extra units.
Mark down overstock only when the surplus won't clear before a deadline, such as the season close or a cash date. Then run a multi-buy or a bundle on the surplus quantity. My illustrative range is an effective 15% to 20% off.
The multi-buy ends the week on-hand drops back to four months of supply. Leaving it running past that line discounts units the normal pace would have sold anyway.
Depth past the 90-day line and for dead stock
A SKU past the 90-day line gets one terminal price for one 21-day window at most. That applies only if the quantity fits a clearance rack. My illustrative terminal price sits around 50% to 60% off, and whatever remains after 21 days exits.
Dead stock skips the ladder. CMP's dead stock definition lists liquidation, donation or a terminal markdown as the realistic routes. The exit rules below decide which one applies.
| Bucket | First step | Second step | Longest stay before exit (illustrative) |
|---|---|---|---|
| Healthy | No markdown | No markdown | No exit; sorted again weekly |
| Overstock | Pause reorders | Multi-buy or bundle on surplus, effective 15% to 20% off, only near a deadline | Until supply falls to four months or the deadline arrives |
| Slow-moving | 14-day move, then 20% to 30% off | About 50% off original retail | 56 days, or 77 with one hold |
| Past the 90-day line | Optional terminal price, 50% to 60% off | None | 21 days |
| Dead stock | None | None | Exits at the next weekly review |
Exit Rules: Five Triggers That End the Markdown Ladder
An exit rule is a preset condition that ends in-store markdowns on a SKU and sends the remaining units out. Any one of the five triggers below is enough, and each one gets checked at the weekly review.
Exit rules are the part of a markdown cadence that's easiest to leave to mood. Writing them down before the first cut is what keeps a ladder from turning into a habit.
Trigger 1: The 90-day line
A SKU with no sale in the last 90 days exits at the next weekly review. It doesn't start a ladder, and it doesn't wait for the 180-day dead stock label.
The 90-day line also applies mid-ladder. In practice, a slow mover on the ladder hits Trigger 2 first, so this trigger mostly catches SKUs nobody looked at.
Trigger 2: Two price steps are done
The ladder has two price steps and a hard stop. Whatever remains 21 days after the second markdown exits, with no third step.
A third in-store markdown is the trap this trigger exists to prevent. Each extra step costs another 21 days of rent share on units that already failed at two prices.
Trigger 3: The next window nets less than an exit offer today
Before each markdown step, compare two numbers. The first is expected cash from the next window, minus that window's rent share. The second is the best exit offer for the same units today, net of any fees.
Estimate expected units from the last window's sales, nudged up for the deeper price. If the exit offer is larger, skip the step and exit now.
The test is strict on purpose. A step that loses it costs the store more to run than the step brings in.
Trigger 4: The calendar runs out
When the season close or a fixed cash date lands before the ladder can finish, the remaining units exit on that date. Cash dates are the checks you already know are coming: rent, payroll and the deposit on next season's buy.
Our markdown vs liquidation analysis lists needing cash on a fixed date as one of the conditions where liquidation wins. The calendar trigger turns that condition into a date on the wall.
Trigger 5: The surplus line for overstock
For overstock facing a deadline, estimate how many units the floor could sell before that deadline at double the current pace. Doubling is my illustrative allowance for a multi-buy lift.
Units beyond that number are surplus, and they exit now. Waiting for the multi-buy to fail on them only adds weeks of rent share to the same outcome.
Store example
In the hypothetical gift shop, 52 planters at $728 cost would carry about $2,080 of rent share at three sales a month. Under the ladder and exit rules, their stay ends in 56 days with about $224 of rent share spent.
A free workspace classifies eligible SKUs from a supported connection or reviewed upload, protecting stockout-risk and data-incomplete items from recovery actions. It shows which of your items look like the planters.
Where exited stock goes
Exit means the units leave the sales floor for good. The routes are liquidation, donation, a vendor return where your terms allow one, or a write-off.
Get at least two liquidation offers on any lot worth more than a month's rent at cost. Buyers price against their own resale value, so your original cost carries little weight in the offer. How to liquidate excess inventory in 8 steps walks through building the lot.
Donation and write-off have tax treatment that depends on your entity and jurisdiction, so talk to your accountant before choosing either.
CMP Exchange is the liquidation marketplace run by Cash Margin Partners. Sellers publish listings to participating buyers, accept an offer, and get paid through Stripe after the buyer confirms delivery. CMP Exchange availability and transaction handling follow its published seller terms.
CMP earns a fee only when a sale closes, per the pricing page. On a large lot that fee is real money, and a direct broker relationship may cost less at volume.
Where Cash Margin Partners Fits in a Markdown Cadence
Cash Margin Partners is an inventory cash-recovery practice for independent, owner-operated retailers. CMP shows them exactly how much cash is trapped in unsold inventory and gives them a prioritized plan to get it back.
The free CMP workspace connects read-only to Shopify or Square, or takes item-level catalog and sales exports as a spreadsheet upload. It classifies eligible SKUs as dead stock, slow mover, overstock, stockout risk, healthy active or data incomplete, and ranks recovery outcomes by expected cash and time-to-cash.
Lightspeed Retail X-Series also connects, through a capacity-managed custom app that may pause new connections. Availability depends on workspace eligibility, and the integrations page lists every current connection.
CMP gives price-to-sell recommendations built from the store's own sales history, which replaces the instinct step in the cadence. With enough supported sales history and cost data, CMP estimates 30, 60 and 90-day cash-at-risk ranges. Cash-at-risk is the dollar value of inventory CMP forecasts won't sell inside the window. Forecasts and predictive alerts require a recent successful supported live connection and sufficient history and cost evidence; model projections are not guarantees.
CMP's recovery order sends dead stock out first, since delay costs it the most. CMP never writes to your POS, so every price change still happens in your own system on your review day.
The analysis is only as good as your cost and sales history. Thin or messy data produces thin answers, and missing unit costs are the first gap to fix.
A Worked Example: One Gift Shop, Five SKUs, One Markdown Cycle
Take a hypothetical 1,400-square-foot gift and home shop paying $8,400 a month in rent. The owner runs the aging sort on a Tuesday in early October, from a 12-month sales export with unit costs.
Planters sit in a category whose median SKU sold 24 units in 90 days, so half the median is 12. Tea towels sit in a category with a median of 60, so half is 30.
| SKU | Cost / retail | On hand | Units sold, last 90 days | Last sale | Months of supply | Bucket |
|---|---|---|---|---|---|---|
| Cedar candle | $9 / $24 | 40 | 36 | Yesterday | 3.3 | Healthy |
| Linen tea towel | $6 / $16 | 220 | 120 | Today | 5.5 | Overstock |
| Ceramic planter | $14 / $36 | 52 | 9 | 23 days ago | 17.3 | Slow-moving |
| Woven wall hanging | $31 / $79 | 12 | 0 | 104 days ago | No 90-day sales | Past the 90-day line |
| Brass bookends | $22 / $58 | 30 | 0 | 212 days ago | No 90-day sales | Dead stock |
The cedar candle: no action
At 3.3 months of supply, the cedar candle is healthy. It keeps its $24 price and its reorder, and the review moves on.
The linen tea towels: a reorder pause and no markdown
The tea towels sold 120 units in 90 days, well above half the category median of 30. But 220 on hand is 5.5 months of supply, which makes them overstock.
The owner cancels the planned reorder of 120 towels, which keeps $720 at cost in the bank. At 40 a month, on-hand falls to the four-month line of 160 units in about six weeks.
No season deadline applies, so the surplus line never fires. Markdown depth on the tea towels stays at zero.
The ceramic planters: the full two-step ladder
Nine sales in 90 days is below half the category median, and 17.3 months of supply is far above four. The ceramic planters are slow-moving and start the ladder.
- Days 1 to 14: moved to the front table at $36. Three sell for $108, leaving 49.
- Days 15 to 35: first markdown, 25% off, to $27. Ten sell for $270, leaving 39. Ten of 49 is 20%, below the 30% hold test.
- Day 36, Trigger 3 check: the owner expects about 12 sales at $18, or $216. Minus $84 of rent share for 21 days, that nets $132. The assumed exit offer is $3 a unit net, or $117 for 39 planters. The ladder continues.
- Days 36 to 56: second markdown, 50% off, to $18. Fourteen sell for $252, leaving 25.
- Day 57, Trigger 2: two price steps are done. The 25 remaining planters exit.
The planters collected $630 in store over 56 days, with about $224 of rent share spent. Holding them at three a month would have run up about $2,080 of rent share.
The Trigger 3 check on day 36 was close: $132 against $117. With a $4 offer, the ladder would have ended right there.
The woven wall hangings: one terminal price
No sale in 104 days puts the wall hangings past the 90-day line. Twelve units fit one clearance rack, so the owner sets one terminal price of $35, about 56% off, for 21 days.
Four sell for $140. The other eight exit.
The brass bookends: straight to the exit lot
No sale in 212 days makes the brass bookends dead stock. They skip the ladder and go straight into the exit lot.
The exit lot and the cycle totals
The exit lot holds 25 planters, 8 wall hangings and 30 bookends: 63 units costing $1,258. Assumed net offers of $3, $6 and $6 a unit bring in $303.
The lot is worth less than a month's rent at cost, so the two-offer rule doesn't require a second bid. Asking for one anyway costs an email.
| SKU | Bucket | Action | Cash collected or kept |
|---|---|---|---|
| Cedar candle | Healthy | None | Keeps selling at $24 |
| Linen tea towel | Overstock | Reorder of 120 units paused | $720 kept at cost |
| Ceramic planter | Slow-moving | Move, 25% off, 50% off, exit | $630 in store, $75 from the exit lot |
| Woven wall hanging | Past the 90-day line | Terminal price, then exit | $140 in store, $48 from the exit lot |
| Brass bookends | Dead stock | Exit lot | $180 from the exit lot |
Across the cycle, the store collects $1,073 and keeps $720 of reorder cash in the bank. In-store markdowns on units with live demand brought in $770, and the exit lot brought in $303 on units without it.
Those two numbers carry the lesson from our markdown vs liquidation analysis. Markdowns recover more per unit while demand exists, and liquidation clears what's left in one transaction.
Every figure in this example is an illustration of the rules, built for this guide. None of these figures are client data or a forecast of what your store will recover.
Benchmarks: What Good Looks Like for Markdown Cadence
I haven't found a public dataset of markdown depth or timing averages for independent stores that would hold up to checking. The useful public benchmark is inventory relative to sales, and the rest is process discipline you can measure yourself.
Inventory-to-sales ratios by retail category
The Census Bureau publishes seasonally adjusted inventories-to-sales ratios by kind of business each month. Multiply a ratio by about 4.3 to read it as weeks of supply.
| Kind of business | Inventories-to-sales ratio, July 2026 | Approximate weeks of supply |
|---|---|---|
| Building materials, garden equipment and supplies | 2.15 | About 9 |
| Clothing and clothing accessories stores | 2.11 | About 9 |
| Furniture, home furnishings, electronics and appliance stores | 1.60 | About 7 |
| Retail trade, total | 1.27 | About 5.5 |
| General merchandise stores | 1.24 | About 5 |
| Food and beverage stores | 0.77 | About 3 |
Source: U.S. Census Bureau, Manufacturing and Trade Inventories and Sales, July 2026 data released September 16, 2026. The clothing ratio also runs monthly as FRED series MRTSIR448USS.
These ratios cover all U.S. retailers, chains included, and blend every SKU into one number. Compare your store's ratio to your category's, then use the buckets to find which SKUs pull it up.
Process benchmarks I'd hold a markdown program to
These are my illustrative targets, drawn from the rules in this guide. No survey stands behind them, and they're meant to be checked against your own weekly review.
- Every SKU sorted at every weekly review, with receipts from the last 60 days set aside.
- Zero SKUs past the 90-day line without an exit date on the calendar.
- No slow-moving SKU still on the floor 78 days after its ladder started.
- Every markdown has its next decision date set before the price changes.
- No third in-store markdown on any SKU.
- Reorders paused the same week a SKU crosses four months of supply.
What a broken cadence looks like
A clearance rack holding the same items for three months is the clearest sign of a cadence with no exit rules. A SKU on its fourth sticker is the second sign.
The third sign is quieter: reorders still going out on overstock SKUs. That spends next month's cash on units the back room already holds.
Markdown Approaches Compared: Instinct, Calendar, Event and Bucket Rules
The table compares five ways a store can run markdowns. Each row shows what starts a markdown, how depth gets set, and what ends it.
| Approach | What starts a markdown | How depth is set | What ends it | Main risk | Best fit |
|---|---|---|---|---|---|
| Instinct | The owner notices an item | Feel, set item by item | The owner gives up on the item | Late, shallow cuts and a permanent clearance rack | A handful of SKUs the owner watches daily |
| Fixed calendar ladder | Days since receipt | Preset steps for every SKU | The final clearance step | Cuts late sellers that were fine and ignores pace | Stores with uniform, seasonal assortments |
| End-of-season clearance event | Season close | One store-wide percentage | The event ends | Discounts items that would sell anyway, and arrives late for dead ones | Clearing seasonal leftovers in one weekend |
| Bucket rules with exit triggers | The weekly aging sort | By bucket, with a two-step ladder for slow movers | Any of five exit triggers | Needs clean sales and cost data | Independent stores with 12 months of POS history |
| Straight liquidation | No markdown at all | The buyer's offer | One transaction | Lowest recovery per unit on items with demand left | Dead stock and overstock surplus |
Our guide to turning slow-moving inventory into cash uses a fixed ladder: 20% off at day 30, 35% at day 60, clearance at day 90. That ladder is a sound default before you can sort by pace. Once you can, the bucket rules keep healthy SKUs off it.
Clearance events still have a place for true season-end leftovers. How to price a clearance event in 8 steps covers setting the depth for one.
Start Here: Five Steps to Set Up Your Markdown Cadence
- Today, export 12 months of item-level sales, current on-hand and unit cost from your POS. Every rule in this guide runs on that one file.
- Sort every SKU through the six tests in order. Total the units and the cost in each bucket.
- Pick your review day and put the next 12 weekly reviews on the calendar.
- Pause reorders on every overstock SKU and start exits for every SKU past the 90-day line.
- Start the 14-day move on your five largest slow movers by cost, and calendar days 15, 36 and 57 for each.
Frequently Asked Questions About Markdown Cadence
What is a good markdown cadence for a small retail store?
A good markdown cadence for a small store sorts every SKU weekly and moves slow items for 14 days before any cut. It then takes two markdowns 21 days apart, 20% to 30% off and then about 50% off original retail. Remaining units exit, and these illustrative rules should be calibrated to your own categories.
When should you mark down inventory?
Mark down inventory while its season is still running and the SKU still has sales in the last 90 days. Items with no sale in 90 days skip the markdown ladder and go to an exit such as liquidation or donation.
How deep should the first markdown be?
The first markdown should run 20% to 30% off original retail, deep enough to change the customer's decision. Smith and Achabal's 1998 clearance pricing research at three retail chains concluded initial markdowns should be deeper than buyers usually take. A 10% cut usually changes nothing and delays the real decision.
How long should a markdown run before the next cut?
Each markdown should run 21 days before the next decision. Three weeks gives a small store three weekends and three weekly reviews of sales data. If the window sells at least 30% of its starting units, hold the price one more window before cutting deeper.
When should you stop marking down and liquidate?
Stop marking down when any of five exit triggers fires. Three are no sale in 90 days, two completed price steps, and an exit offer that beats the next window's net cash. The other two are a season or cash deadline, and overstock surplus the floor can't clear in time.
Should you mark down overstock?
Overstock usually needs a reorder pause before a markdown, since the SKU already sells at a normal pace. Mark it down only when the surplus won't clear before the season close or a cash date. Then use a multi-buy or bundle on the surplus quantity.
Does Cash Margin Partners change prices in my POS?
Cash Margin Partners never changes prices in your POS, because every connection is read-only. CMP connects to Shopify, Square and, where available, Lightspeed Retail X-Series, or works from a spreadsheet upload. It classifies eligible SKUs as dead stock, slow mover, overstock, stockout risk, healthy active or data incomplete, and you make every price change in your own system. Direct availability depends on production launch status and workspace eligibility; compatible item-level exports remain available after column review.
Sort the Back Room Before You Touch a Price Tag
A markdown cadence works when the bucket sets the depth and a preset trigger ends the ladder. Start with the sort, because every rule in this guide runs on it.
Open a free workspace and connect Shopify, Square or Lightspeed Retail X-Series where available, or upload a spreadsheet. CMP uses six-state classification, including stockout risk and data incomplete, and shows cost evidence where sufficient. There's no card and no time limit. Direct availability depends on production launch status and workspace eligibility; compatible item-level exports remain available after column review.
If you'd rather see a directional number first, the free trapped-cash estimate takes under two minutes. This directional questionnaire gives a benchmark range; use a supported connection or reviewed item-level upload for SKU-level analysis.