What does the minimum markdown of all goods mean?

Markdown of the goods is made upon detection of a deterioration in its original qualities. In this case, the company accepts to lower its initial cost. The procedure for discounting inventory is set out in the Regulation, approved by order of the Ministry of Economy and the Ministry of Finance of December 15, 1999, No. 149/300.

What is markdown

The devaluation of the entire product and its individual groups is one of the ways to solve problems associated with the implementation. Such problems can occur if the stock has left too much residual seasonal goods, if the goods go out of fashion, its shelf life expires if the goods are not in demand by customers. The scale of the markdown should be set as a percentage of the original price, it will depend on the type of product. For example, significant price reductions for durable goods, a prestigious assortment may mean a loss of prestige for customers or be a sign of poor quality. When determining the scale of markdowns, they are guided by the following rule: it must correspond to the minimum value reduction that can attract the attention of buyers and encourage them to buy discounted goods.

The markdown from an economic point of view is a discount to a consumer from a previously valid price. The markdown from an accounting point of view is a decrease in price as a result of revaluation of the value of the goods.

Markdown schemes

Markdown can be carried out according to the following schemes. In accordance with the first scheme, a one-time large-scale price reduction is carried out. Its advantage is to attract a lot of customer attention. According to the second scheme, multiple, rolling markdowns are carried out, which will allow avoiding too much reduction in the cost of goods. There are two approaches to the timing of markdowns. In the first case, it is necessary to delay it as much as possible so that you can sell the maximum possible number of units of goods at the original price. In the second case, to increase the turnover of capital, markdowns are carried out immediately after the peak of sales of goods has passed. The markdown will be effective with the right scale and time.

Pledged goods, goods in reserve or in custody are not subject to discounting.