Is there a formula or rule of thumb for discounting items?
 

Is there? Say I have a $100 item in my store. It didn't sell this year. Is there a rule of thumb as to how much I should discount it?

10%
25%
1/2 off
Make offer
free with purchase

Depends on many things.
Is there demand for your item with your current customer base?
Can the item be found elsewhere for lower cost?
Is the item similer to other lower cost items?
What is the retailers cost of the item, and the profit margin?


So, whatcha selling, can you get a cheaper chinese knock off at wally world, what's it costing you sitting on the shelf, and what would you normally sell it for?

~Nate

I will give you $10 for what ever it is. Is it BEER? :D

When I worked retail, we would advertise some incredible sale, like a "Once in a Lifetime Summer Blowout" for instance...then markup the slow-moving $100 item to $120, advertising it as 40% off (formerly $200)!

That item would literally disappear from the floor within minutes!!! And this tactic worked nearly all the time!!!

The ability to do price comparisons on the internet (non-existent back then) kinda levels the playing field, but many retailers still pull that stunt...

Is it something that may go out of style, discontinued item or decrease in value somehow? Is it a unique item that they can only get from your store? It depends on how badly you need to move it.

Unless a model we carry was dropped or there was a new formulation our prices are staying right where they were. There are all different schools of thought. We've always based our prices on replacement cost and, previous exceptions aside, don't get into the practice of discounting because 1) there will always be someone who will go lower and 2) customers come to expect it. You can be higher priced, you just need to justify it. It's worked for us for 117 years now.

There's no formula; I'd suggest looking at your competition and seeing what they sell it for - if you want to dump it, then undercut the crap out of them.

Actually there is a formula for determining how much someone would be willing to pay for something.
But....it's been over 20 years since I took a finance class! Sorry

Danny

x2

Someone might throw in the cost of the item as a factor.....

Now there's a good rule of thumb.... Don't sell it for less than you paid.

There are so many variables absent from the scenario, such as floor planed, already paid for, cost of item, relationship of item as profit losing advertising draw, ect... that a meaningful response seemed impossible.

Nope.

Depends on a lot of variables, some quantifiable, and some not quantifiable.

Not necessarily.

IMHO,

Why sell it for less than was paid?

If one has to pay tangable tax on it and the "loss" can used to help the cpa at the end of the year it can make sense to sell an item at a loss.

and/or

How about loss leaders?

and

How about suppliers that give a 2-3 percent kickback for paying accounts in full every month, cash flow is cash flow.