Key takeaways
- Choose clearance products with numbers: sell-through rate and weeks of cover show what will not sell at full price in the time you have.
- Mark down in planned steps (a markdown ladder) instead of starting with the deepest discount, and stop at a price floor you set in advance.
- Stacked markdowns multiply: 30% off and then a further 20% off is 44% off the original price, not 50%.
- In the EU the reference price is your lowest price of the previous 30 days, and in France the word "soldes" is reserved for the official sale periods.
- Clearance prices usually have no fixed end, so plan how you will restore prices on items that return to the regular range.
What is a clearance sale, and when should you run one?
A clearance sale is a markdown on stock you want to sell out, such as last season's products, discontinued lines, broken size runs or overstock. Unlike a promotion, the goal is not a temporary price to bring customers in; it is to turn inventory into cash and free space and budget for what comes next.
Run one when holding the stock costs more than the margin you would give up. Storage, cash tied up in inventory, and products that lose value as the season ends all have a cost. Common triggers are the end of a season, a product replaced by a new version, stock left over after a big event, and items with too few sizes or colors left to sell well at full price.
How do you choose which products to clear?
Use two numbers, sell-through rate and weeks of cover, instead of a gut feeling.
- Sell-through rate = units sold ÷ (units sold + units still on hand), for a period such as the season so far. 30 sold with 70 left is 30%.
- Weeks of cover = units on hand ÷ average units sold per week. 70 units selling 5 a week is 14 weeks of cover.
How do you turn those numbers into a clearance list?
Compare weeks of cover with the selling time you have left. If a winter jacket has 14 weeks of cover and the season ends in 6, you will sell about 30 of the 70 units at the current pace and keep about 40. That jacket is a clearance candidate; one with 4 weeks of cover is not. Also count returns that will come back into stock, and check whether the product carries over to next season, because carryover items may not need clearing at all.
Tag the products you choose, for example with "clearance", so you can build a clearance collection and target the same set in other tools. In Shopify, an automated collection with the condition Tag is equal to clearance updates itself as you add or remove the tag (Shopify Help Center).
How do you build a markdown ladder?
A markdown ladder lowers the price in planned steps, so you sell as much as possible at the shallower discounts before you go deeper. Here is an example ladder for a 6-week clearance:
| Step | Timing (example) | Discount off original price | Move to the next step when |
|---|---|---|---|
| 1 | Weeks 1 and 2 | 20% to 30% | Sales in the step are below plan |
| 2 | Weeks 3 and 4 | 40% to 50% | Remaining stock is still above target |
| 3 | Weeks 5 and 6 | 60% to 70% | Only if the price stays above your floor |
| Exit | After the last step | None | Move what is left to another channel: outlet, bundle, liquidator or donation |
How do stacked markdowns change the math?
Stacked discounts multiply rather than add, so check the real total before you announce it. These ladder numbers are an example, not a rule: set the steps from your margin and the time you have, and write the rule for moving on before you start, for example "move to step 2 if fewer than 30% of the remaining units sell in two weeks", so the decision is not made in a panic.
If you run an "extra 20% off sale prices" offer on top of an existing markdown, the formula is: Total discount = 1 − (1 − first discount) × (1 − second discount). 30% off followed by a further 20% off is 1 − 0.7 × 0.8 = 0.44, so 44% off the original price, not 50%. Use the discount calculator or the guide to calculating discount percentages to check each step.
What is the lowest price you should accept?
Set a price floor for each product before the first markdown, and go below cost only on purpose. Price floor = landed unit cost + shipping you pay + payment fees + pick and pack. Above the floor, every sale still adds profit. Below cost, every sale loses money but returns some cash, which can be the right call for stock that will soon be worth nothing.
Example with hypothetical numbers: a dress with a $30 landed cost, $5 of shipping you cover and $2 of fees has a floor of $37. At an original price of $90, step 1 at 30% off ($63) and step 2 at 50% off ($45) both stay above the floor. A 60% step would price it at $36 and lose $1 per order, so stop at step 2 and use another exit for the rest. The margin calculator shows the margin left at each price.
What rules apply to clearance and reference prices?
Show a crossed-out price only if you really charged it, and check local rules on sale periods and wording. In the EU, an announced price reduction must show the prior price, which is the lowest price you applied in at least the 30 days before the reduction. For progressive reductions, such as a markdown ladder, the directive lets the reference stay at the price before the first reduction (Directive (EU) 2019/2161). Each country writes the directive into its own law, so check yours.
France goes further. The word "soldes" may only be used during the two official sale periods, which start in January and late June and last 4 weeks each. During the soldes you may sell below cost, which French law generally prohibits in ordinary promotions, but the products must have been offered for at least a month before the soldes start, and you cannot restock them during the sale. Outside those periods you can still run promotions, but you cannot call them soldes (Service Public).
In the US, the FTC's deceptive pricing guides expect a former price to be one you openly offered for a reasonably substantial time. And on Shopify, the compare-at price must be higher than the price for the product to show as on sale.
How do you set clearance prices with Shopify's built-in tools?
Natively, you set clearance prices with the bulk editor or a CSV: enter the current price as the compare-at price, then enter the lower price.
- Export the products first (Products > Export) so you have a copy of the current prices. The product CSV includes price and compare-at price columns (Shopify Help Center).
- Filter the products list by your clearance tag and open them in the bulk editor.
- Add the compare-at price column, enter the current price there, then enter the clearance price in the price column.
- Check the clearance collection on the storefront: a product shows as on sale only when its compare-at price is higher than its price.
- For each later step, edit the prices again from the original price. Keep the exported file so you can restore prices on anything that stays in your range.
How do you run a markdown ladder with SalePilot?
With Sale Scheduler by SalePilot, each step of the ladder is a sale that you preview, start, and restore before the next step. Percent-off prices, price endings and compare-at prices are calculated for every variant, so you are not typing prices by hand.
- Create a sale and target your clearance products: a collection, or one advanced condition such as Product tag equals clearance. Add one exclusion type if some variants must stay at full price.
- Choose Decrease price by percent, for example 30%, and a price ending such as .99. For the compare-at, choose Set compare-at to original price so shoppers see the current price crossed out.
- Review the preview. Warning rows are not applied, because the compare-at would not be higher than the new price; Skipped rows have missing data or an invalid price.
- Choose Start after I review. Clearance prices go live right after you confirm and have no automatic end.
- When it is time for step 2, click Restore prices on step 1, then create and start step 2 with the deeper discount, such as 50%, calculated from the original prices again. Do this at a quiet hour, because products show their original price for the few minutes in between.
- When the clearance ends, restore the last step for any items that return to the regular range. Restoring is never blocked by your plan or usage and does not count toward usage.
Never let two sales change the same variants at once. SalePilot's restore help page advises against overlapping jobs on the same variants during sale windows, and stale protection skips any variant whose price was changed after a sale started. Restore one step before you start the next, and preview the new step after the restore.
How do you stop clearance from eating your margins?
Keep clearance contained: its own collection, a planned end, and a clear list of what you will not clear. If something goes wrong, see how to undo bulk price changes for recovery options.
- Keep clearance items in their own collection and out of your main navigation, so full-price shoppers are not pulled into it.
- Leave out products you will reorder at the same cost; marking down carryover lines teaches customers to wait.
- Stop the ladder at the floor and move the rest to an outlet, a bundle with full-price items, a liquidator or a donation.
- Check consumer law before you call items final sale. In the EU, for example, the 14-day right of withdrawal for online purchases still applies to discounted goods.
- Review the result: units cleared, cash recovered and margin given up, against the plan, and order less next season for the lines that ended up on clearance.