Discount To Clear Inventory Calculator
Weigh a clearance markdown against the cost of holding stock: recovered cash, profit or loss per unit, and whether clearing beats carrying.
How it works
Clearance price = price × (1 − discount%) · Profit/unit = clearance price − cost · Carrying avoided = monthly carry × months × units · Net vs holding = total profit + carrying avoided
Clearing slow stock is not just about the markdown — holding inventory costs money too, through storage, tied-up capital, insurance and the risk it becomes obsolete. This tool compares the profit (or loss) of selling now at a discount against the carrying cost you would incur by holding. Even a markdown that dips below cost can be the better move once the avoided carrying cost and the value of freeing up cash and shelf space are counted.
Worked example
A $100 item costing $40, marked down 40%, sells for $60 — still a $20 profit per unit. Across 150 units that recovers $9,000 in cash. Holding them another 6 months would cost $1.50 × 6 × 150 = $1,350 in carrying cost, so clearing now is about $4,350 better than holding.
Frequently asked questions
When should I sell below cost to clear stock?
When the carrying cost, cash tied up and obsolescence risk of holding exceed the loss on the markdown. Freeing shelf space for faster-moving goods often makes a small per-unit loss the profitable choice overall.
What goes into carrying cost?
Warehousing and storage, the cost of capital tied up in the stock, insurance and taxes, and shrinkage or obsolescence. It is commonly estimated at 20–30% of inventory value per year — enter your own monthly per-unit figure here.
Does a clearance markdown hurt my margin?
On that item, yes — but the alternative is often worse. Dead stock earns nothing while it consumes space and capital. The right comparison is markdown loss versus the full cost of continuing to carry it.
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Educational estimate, not financial advice.