Choose a markdown tool: Excel: An Internal Tool or a Dedicated Solution
Choosing a markdown tool means, first and foremost, calculating the cost of a poorly planned markdown: giving up margin too early, applying markdowns too uniformly, leftover inventory, wasted team time, and poorly maintained 30-day reference prices.
Excel is sufficient for a small scope; the internal tool holds its own with a dedicated data team. Beyond that, a dedicated solution must demonstrate that it runs simulations, makes decisions on a per-store basis, explains its recommendations, and ensures compliance on its own.
At the end of every season, the same question comes up: when to mark down prices, by how much, and where. Many retailers still answer this question using a spreadsheet and a pricing grid that’s the same across the entire network.
This article is intended for pricing, sales, and procurement departments that are considering implementing a new system.
He compares the three options—Excel, an in-house tool, and a dedicated solution—in terms of their actual costs, and then outlines what a markdown tool must demonstrate before it is selected.
Markdown tool: What is it?
A markdown tool is software that determines, on a per-SKU and per-store basis, when to lower a price to move inventory and by how much, by simulating the effect of each price level on sales, margin, and remaining inventory.
It does not replace commercial policy. It replaces the way markdowns are currently determined: a spreadsheet, a standard pricing grid used across the entire network, and a lot of last-minute decisions.
A pricing or sales team looking to regain control has three options: stick with Excel, develop a tool in-house, or choose a dedicated solution.
Our beliefis this:the issue isn't the cost of the tool; it's the cost of a poorly decided markdown. As long as that cost isn't taken into account, the three options seem equally valid.
The True Cost of a Poorly Managed Price Markdown
The cost of a price reduction is reflected in the reduced margin, not in the advertised discount rate.
The mechanics of this are described in our method for moving inventory without selling it off too early. Here, the question is a different one: what is the cost of making the wrong decision?
Too early, too strong, too late: three margin leaks
Offering a discount too early means giving a discount to customers who would have bought the item at full price. Profit is lost without a single additional item being sold.
Applying too steep a discount means applying the same discount to a product that’s still selling and to one that’s not moving. The former is being sold off at a bargain price, but that doesn’t mean the latter will start selling again.
If you wait too long to mark down prices, you’ll have to push harder to move the same inventory—even though demand has already dried up. The remaining stock ends up in a clearance sale, as a donation, or as dead stock.
These three errors have a common cause: a decision made by category and applied to the entire network, even though sales are determined by brand and by retail location.
Remaining inventory and shift schedules
Inventory left over at the end of the season ties up cash and space, and then weighs on the following season.
The best approach is to plan this out weeks before the first delivery, as explained in our article, to account for remaining inventory and seasonal trends.
Then there's the least visible cost: the days spent consolidating sales, recalculating thresholds, and resending files to stores. That time isn't spent making decisions.
30-Day Reference Price: The Regulatory Cost
As of May 2022, any advertisement for a price reduction must display a strikethrough price equal to the lowest price charged in the previous 30 days.
One in three businesses offering price reductions was found to be in violation during the DGCCRF’s 2024 inspections, out of nearly 5,300 businesses and 350 locations inspected.
(DGCCRF, “Black Friday”: Beware of False Promises, November 2025)
When it comes to markdowns, the impact is tangible. A promotion launched a few weeks before the sales can lower the list price and reduce the discount you’re allowed to advertise.
Successive price reductions within the same transaction may retain the price from before the first reduction. However, the tool must be able to distinguish between the two cases, item by item.
The display rules are detailed in our article on genuine discounts and properly marked-down prices.
Excel, an in-house tool, or a dedicated solution: comparing the options
The three options don't cost the same, and prices vary by location. The table below compares them based on what really matters during a clearance sale season.
| Criterion | Excel | Internal tool | Dedicated Solution |
|---|---|---|---|
| A Grain of Decision | One grid per category | The one on the team who knows how to code | Product Code and Retail Location |
| Pre-delivery Simulation | Manual, rarely done | To be built and maintained | Sales, Margin, and Inventory |
| 30-Day Reference Price | Verified by hand | To be developed | Calculated and controlled |
| Team Times | Raised every season | Low in usage, high in maintenance | Focused on the decision |
| Main Risk | The Average Decision | The Author's Departure | A tool that was poorly designed from the start |
Managing Markdowns in Excel
Excel has one real advantage: it's already there, and everyone knows how to use it. For a few hundred SKUs and a single retail location, it's often all you need.
Its hidden cost isn't the pricing formula error—even though that happens frequently. It's the compromise it forces: a single pricing grid, since it's not possible to recalculate each item in every store every week.
53% of operations professionals encounter a spreadsheet error every week, and 22% encounter one every day.
(DOSS, Spreadsheet Errors Survey, May 2026)
The other limitations of spreadsheets—from traceability to sharing among teams—are detailed in our article on the limitations of Excel for price management.
Develop an in-house markdown tool
Building your own tool makes sense when a data team is already in place. The prototype comes together quickly, and it aligns with the company's established practices.
That's when the challenge begins. You have to model elasticity by reference, recalibrate after each season, incorporate the 30-day rule, and cope with the departure of the person who wrote the model.
Choose a dedicated markdown solution
A dedicated solution comes with proven templates, built-in compliance, and a team to maintain them. It requires a subscription fee and an implementation project.
Its value increases as the number of SKUs, retail locations, and seasons to manage grows. It increases even more if it shares the same database as your regular prices and promotions.
We make this point in our article on a single tool for pricing, promotions, and markdowns: the conflict between promotions and markdowns only becomes apparent when both decisions are made in the same place.
Which Markdown Software to Choose: What It Must Prove
In the demo, all the solutions show a nice inventory curve that drops to zero at the end of the season. What sets them apart can be seen in your history.
A viable solution must demonstrate four things before it is selected.
She runs simulations before making a recommendation. Each proposed tier must include its expected impact on sales, margin, and remaining inventory—not just a discount percentage.
She makes decisions on a case-by-case basis. The same product doesn't warrant the same decision in a store that's ahead of schedule versus one that's behind on its sales rate. Sometimes, keeping the full price is the best decision.
She explains her recommendation. A buyer won't apply a 40% discount if they don't understand it. The factors justifying the discount must be clear.
She is solely responsible for compliance. The 30-day reference price must be calculated and verified by the tool, not checked manually the day before the sales begin.
Finding the right balance between margin and sales velocity remains a management decision.
Key Questions to Ask a Publisher
Four questions are often all it takes to decide between publishers.
What data will you start with? A solution that requires a complete historical record and a data connector before it can produce any results will delay the first useful season by a year. It’s better to start with your sales, inventory, and pricing exports.
How do you measure the gain? The margin achieved must be compared to a control group over an actual end-of-season period. This is the purpose of a well-defined pricing proof of concept (POC).
What does the tool do when the bearing isn't working? If the flow doesn't resume after a reset, the problem may be the exposure or the remaining size. A good tool will flag this instead of suggesting another reset.
Who has the final say? Minimum margin, maximum depth, excluded stores: Your rules must govern every recommendation, and your teams must approve them.
These questions apply to any tool project, as outlined in our guide to selecting and implementing a pricing tool.
Markdowns and Assortment: What the Field Data Shows
Markdowns aren't just for the end of the season. They often reveal an overly broad selection, part of which is no longer selling.
A garden center chain in the Caribbean that we are working with has set a clear goal:to reduce its product lineup from 20,000 to 12,000 items and free up 200 k€ in cash flow. This goal is currently being pursued.
Before discontinuing a product, the team first tests a price reduction and monitors the impact on sales. Price markdowns become a tool for making decisions about the product mix, not just a way to clear out the shelves.
This relationship between seasonality, inventory, and price is unique to each industry. We explore it in detail with regard to pricing in the home improvement and gardening sectors, as well as for the early detection of end-of-season items and dormant inventory.
Stand out less, or stand out better?
Our approach as practitioners: The goal is not to apply as little force as possible. It is to apply force earlier, with less intensity, and only where the flow breaks down.
That's the logic behind our Markdown and markdownofferings: the right discount, at the right time, item by item and store by store, simulated before being applied.
For the timeline and the depth of the tiers themselves, see our article on how to create a tiered markdown grid. And if you’re not yet sure where the lost margin lies, a price diagnostic can help you pinpoint it.
Would you like to know how much your price markdowns are really costing you?
Our experts work with you to simulate your end-of-season clearance prices—item by item and store by store—before any decisions are made.
Let's talk about your markdownsFAQ: Choosing a Markdown Tool
The one that simulates the effect of each discount before recommending it, at both the product and retail levels.
A useful markdown software program does more than just suggest a percentage: it shows the expected impact on sales, margin, and remaining inventory, and explains the factors behind its recommendation.
It must also comply with your rules (minimum margin, maximum depth) and calculate the 30-day reference price on its own. The best test is still an actual end-of-season performance, compared to a control group.
Based on what a poorly decided price reduction costs today, not on a list of features.
Discounts offered too early, uniform markdowns across the entire network, remaining inventory sold at a loss, days spent on spreadsheets: these costs alone already indicate what kind of tool to look for.
Next, compare the solutions based on their ability to build on your existing export data, make decisions by retail location, explain their recommendations, and measure the gains on a control group.
A platform that lifts off earlier, with less force, and only where the flow stalls.
The loss of margin rarely stems from the markdown itself. It stems from a discount offered to customers who would have purchased the item at full price, or from a belated markdown that has a significant impact on demand that has already dried up.
A platform that uses the same database as your regular prices and promotions also prevents two price reductions from being applied to the same item. Booper's customers see their profit margins increase by 0.5 to 3 points within a few months.
Yes, if it takes into account the flexibility of each product and the time remaining until the end of the season.
The appropriate inventory level depends on how demand responds to a price reduction, the amount of inventory to be sold, and the residual value if the product remains unsold.
A good tool recalculates weekly based on actual sales. It can also determine that no discount is needed at a store that is ahead of schedule, or that a stock transfer is more profitable than an additional discount.
Yes, on a small scale: a few hundred products and just a few retail locations.
Beyond that, the spreadsheet forces a compromise. Since we can’t recalculate each SKU in every store every week, we apply a standard pricing grid that slashes prices where the product is still selling but doesn’t go far enough where it’s not moving.
Added to this are formula errors, the consolidation period, and the manual verification of the reference price 30 days before each discount announcement.
Rarely, unless you have a dedicated data team focused on pricing over the long term.
The prototype is released quickly. The costs come later: modeling elasticity by reference, recalibrating after each season, incorporating regulatory changes such as the 30-day reference price, and maintaining the tool when its developer changes jobs.
This cost is calculated over several years, taking into account maintenance hours and the risk of relying on a few key individuals.
By calculating, for each item, the lowest price charged in the 30 days prior to the discount.
This is the price that should appear as the crossed-out price. A promotion launched shortly before the sales can therefore reduce the discount that can be displayed during the markdown.
Successive price reductions within the same promotion may retain the price from before the first reduction. A markdown tool must perform this calculation automatically, item by item, and issue a warning before a non-compliant announcement is sent to the store.
In the toy industry, Black Friday kicks off the Christmas shopping season, which accounts for more than a third of annual sales. With the 30-day rule, its price becomes the benchmark for nearly all December promotions.
The discount applies only to the toys being compared, not to licensed products or this year's new releases. Baby care—a thoughtful purchase driven by the timing of births—calls for moderate discounts.
In the high-tech sector, Black Friday accounts for a major portion of annual sales and takes place two months after the back-to-school product launches. It is intended to clear out the previous generation of products rather than to sell off the new ones at a discount.
Refurbished products set a ceiling on the price of new items, and some prices are rising due to the cost of components. The advertised discount is always calculated based on the lowest price over the past 30 days.
When it comes to home appliances, Black Friday success depends more on the selection of models than on the size of the discounts. An 8% price reduction may require a 50% increase in sales to maintain the same profit margin.
It's best to act quickly on the models that are actually being compared, maintain the prices of exclusive models, focus on delivery, installation, and trade-ins, and prepare the 30-day policy starting in October.