Discount Price Calculator
Discount Price Formula
The Price Discount formula is:
D = S / (1 + PNY)where,
D is the discount price of the product
S is the current selling price of the item that is "stale" or not moving
P is the profit margin or mark-up of the item (as a percentage). For example, you paid $1.00 for the item with a markup of 30% (.3), so you sell it at $1.30. In this situation your profit margin is .3.
N is the number of inventory turns for the item
Y is the average number of years it will take for you to completely sell the item. To find this, take the number of years you currently have, at its current price and divide by 2
What is Price Discount and Why?
As a retailer, we all buy items that we thought would be big items and hot sellers... only to find out that our consumers didn't agree. To offset this loss, slow moving inventory, and tied up capital, we can refer to the price discount formula to determine the optimal price to move the units without completely losing our shirts. While we lose our profit margin when using the above formula, we do establish a break-even price to at least recoup our capital; this of course assumes that the items will sell with their new price!