What's the best type of discount to use to clear out old inventory?

What's the Best Type of Discount to Clear Out Old Inventory?

Old stock is not an asset sitting quietly on a shelf. It is cash frozen in boxes, and it costs you storage space every week it stays. The goal is to turn it back into cash as fast as possible, with the least damage to your margins and your brand. The answer is not one magic discount; it is matching the right discount type to each tier of leftover stock. Here is the structure that works.

First sort the stock into three tiers

Different leftovers need different treatment. Sort before you discount anything:

• Tier 1, slow but sellable: Good products that simply overstocked. They can still sell close to full value.
• Tier 2, old but usable: Last season's colors, older versions, items with fading demand.
• Tier 3, dead stock: Dated, damaged packaging, or nobody wants it at any reasonable price.

Tier 1: a shallow percentage off, with a deadline

For products with leftover demand, start at 20 to 30% off for one to two weeks. This is the tier where you should be careful not to give away margin you do not need to give. Keep in mind what discount depth actually does: in a Growth Suite dataset of 5M+ personalized offers across hundreds of Shopify stores, 10 to 15% off converted walk-away customers at 8 to 12%, while 20% or more reached 17 to 23%, nearly double. For stock you truly want gone, the shallow end rarely has enough force, so 20 to 30% is the realistic starting band for clearance, not 10%.

Tier 2: bundles and BOGO move units faster

When a percentage alone stops working, change the structure instead of just going deeper:

• Bundle with a best-seller: Pair the slow item with a popular one at a combined price. The best-seller does the selling; the old stock rides along.
• BOGO or buy two get one: Moves multiple units per order and feels generous to the customer. The margin math is very different from a straight percentage cut, as we show in our comparison of BOGO vs percentage discounts and what each does to your margin.
• Deeper cut with a hard deadline: 40 to 50% off for 48 to 72 hours. The deadline does more work than the extra ten points.

Tier 3: stop selling it and start using it

Dead stock rarely deserves another price cut. It deserves a new job:

• Free gift with purchase: Clears units with zero visible markdown and raises the perceived value of full-price orders.
• Mystery box: A fixed-price surprise box lets you decide what goes inside, and customers enjoy the game.
• Fixed dollar amount off: On low-priced items, a fixed amount can read bigger than a percentage. The Rule of 100 says under $100 a percentage usually looks larger, over $100 the dollar amount wins; details in our article on the Rule of 100 and discount psychology.

Rules that protect your margin and your brand

• Discount only the clearance items. A storewide sale to move old stock taxes products that would sell at full price anyway.
• Every stage gets an end date. Clearance without a deadline is just a cheaper store, and customers learn to wait for the next drop.
• Never call it old stock. "Last chance," "final units," "warehouse finds." The words decide whether it feels like a deal or a warning.
• Protect recent buyers. Do not email a 50% clearance to people who paid full price last month for the same item.

Common mistakes to avoid

• Starting too shallow. 10% off does not clear a warehouse; it just makes next month's deeper cut look routine.
• Going storewide. You lose margin on healthy products to solve a problem they do not have.
• No deadline. Urgency is half the mechanism. Without it, even 50% off drags.
• Holding dead stock for "someday". Storage plus locked cash usually costs more than the loss you are avoiding.
• Clearing too often. If every month is clearance month, customers stop buying at full price. Fix the buying, not just the selling.

Frequently asked questions about clearing old inventory

What discount percentage clears old stock fastest?

Start at 20 to 30% for sellable items, then 40 to 50% with a 48 to 72 hour deadline for what remains. Shallow cuts under 15% rarely move old stock.

Is BOGO better than a percentage discount for clearance?

Often yes, because it moves multiple units per order and feels generous. Run the margin math for your products before choosing.

How do I clear inventory without hurting my brand?

Keep the sale short, discount only the clearance items, use "last chance" language instead of "old stock," and use free gifts for the worst sellers.

Should I use a fixed amount or a percentage?

Under $100, a percentage usually looks bigger; over $100, the dollar amount wins. That is the Rule of 100. Test it on one product group if you are unsure.

What do I do with stock that will not sell even at 50% off?

Stop discounting it. Use it as a free gift with purchase, sell it as a mystery box, or liquidate it in bulk. Convert it to cash or goodwill and move on.