End of year stock clearing

You've got eleven of something you were completely sure would sell, and every time you open the cupboard you feel slightly worse about it.

The money you paid for those eleven is gone. It went the day you paid the supplier, and no decision you make now brings it back. The only live question is what they're worth today and what it costs you to keep them until they're worth less. If you paid $14 each for eleven units and you can sell them at $18 this month, that's $198 of real cash. Holding out for the $32 you originally wanted, for a fourth season, is not patience. It's a $198 loan you're making to yourself at a bad rate.

The end of the year is when to do this, because you're about to buy for the next one and the cupboard has to be empty.

Sunk cost, said properly

The number you paid is irrelevant to the decision. That's uncomfortable and it's also just true.

What matters is:

1. What you can realise for it now, honestly, not what you hope.
2. What it costs you to hold it for another year.
3. What it'll be worth in a year, which for most categories is less.
4. What the space and attention are worth if the stock weren't there.

Line four is the one people never count and it's often the biggest. Dead stock doesn't just sit there. It takes a slot in your shop, a row in your spreadsheet, a photograph you keep re-cropping, and a place in your head every time you plan a post. A product that sells three a month is competing for that attention with one that sells one a year, and the one that sells one a year keeps winning because you feel guilty about it.

The most expensive thing about dead stock isn't the money. It's that you keep photographing it, keep featuring it, and keep giving it space at the top of your shop where something that actually sells should be.

Work out your own carrying cost

There's a widely quoted rule of thumb about what holding inventory costs per year as a percentage of its value. Ignore it and build your own, because yours is knowable and takes ten minutes.

Add up, for a year:

Cost	How to get it
Cash tied up	What the money would do elsewhere: stock that turns four times a year, or simply not being overdrawn
Storage	If you rent, the proportion of the rent. If it's your spare room, what you'd charge a stranger, or zero if you're honest that it's free
Damage and shrinkage	Count what's got dusty, faded, crushed or lost in the last year. It's never zero
Obsolescence	For anything seasonal, trend-led, dated or packaged with a year on it, this is brutal
Your time	Counting it, moving it, listing it, thinking about it

For a very small shop the honest answer is often that storage costs nothing and cash costs everything. If the $600 sitting in eleven unsold units is $600 you can't spend on the thing that sells out every month, the carrying cost isn't a percentage, it's the entire margin on the product you couldn't buy.

The number that tells you it's dead

Sell-through, not gut feeling. Take any product and work out its months of cover: units on hand divided by units sold per month.

• Sold 3 in the last 6 months, so 0.5 a month. 11 in stock. That's 22 months of cover.
• Sold 8 last month, 4 in stock. That's 0.5 months of cover, and you should be reordering, not discounting.

Set yourself a line and apply it without arguing. Something like: over 12 months of cover at the end of the year, it goes in the clearance. Under 3 months, reorder. In between, watch it.

The other signal, which is faster: date of last sale. If nothing has sold since March, it doesn't matter what your sell-through calculation says. Sort your products by last order date and look at the bottom ten. That list is your clearance list and you already knew what was on it.

Reading your own numbers properly rather than by feel is a habit worth building beyond this one exercise, and it's covered in how to read your own numbers.

The markdown ladder, with dates attached

The mistake is a single dramatic sale. The better approach is a ladder with dates written down in advance, so each step is a decision you already made rather than one you make while feeling bad.

Give each rung ten days. If it hasn't moved, drop to the next one. Don't skip and don't stall.

Rung	Move	Why
1	20% off, to your existing buyers only, by message	Costs you the least, and the people most likely to buy hear first
2	20% off, public	Same price, wider audience
3	Bundle it with a best seller at a modest saving	Moves the dead unit without publishing a low price for it
4	40% off, public, with a stated end date	Now you're serious
5	Free with any order over a threshold	Converts dead stock into an order-value lift
6	Give it away: samples, a market stall, a charity, a giveaway	It's costing you more to keep than to lose

Rung five is underrated. A $32 item you can't sell, offered free on orders over $60, does two useful things: it raises average order value on products that do sell, and the buyer values it at $32 while it costs you the $14 you already spent. You've turned a liability into a promotion budget.

Rung three is the other one worth dwelling on. A bundle moves the unit without teaching anyone that your prices drop, which matters if you'll sell the same line again next year. The general arithmetic on what a discount actually costs is in how to run a discount without losing money, and it's worth reading before you set rung four's number.

Existing buyers first, always

Before anything goes public, message the people who've already bought from you.

They convert far better, they cost nothing to reach, and a clearance offer sent privately reads as a favour rather than as desperation. "I've got four of these left in the wrong colour and I'd rather you had them than me" is a message people genuinely like receiving.

It also protects your public pricing. A private offer to 60 past buyers doesn't tell the internet that your $32 product is a $19 product.

Do this by whatever channel you already own: a broadcast list, a WhatsApp group, an email list, or just forty individual messages, which is a fine use of an evening. If most of your relationships live in DMs, how to get repeat buyers covers the follow-up habit that makes this list worth having in the first place.

Worked example: Sam, screen-printed tees, Denver

Sam prints tees in a garage in Denver. Retail $28. A blank costs him $6.40, ink and screen time about $3.20, so $9.60 landed cost.

He has one design that didn't work: a sage-green colourway he printed 60 of in March. Eight months later he's sold 17. That's 43 left, and about 2 a month, which is 21 months of cover. He has $412 of cash sitting in a box under a workbench.

His options, priced:

Option	Cash back	Notes
Keep them, sell 2 a month at $28	$1,204 over 21 months	Assumes demand holds for two more years. It won't. Shirts fade, folded, in a box
20% off, $22.40	$963 if all 43 sell	Probably sells 12 to 18, then stalls
40% off, $16.80	$722 if all 43 sell	Above cost by $7.20 a unit
Free with any order over $60	$0 direct	But lifts around 30 orders from ~$34 to $60+
Bin them	$0	Plus the cupboard back

What he actually did, on the ladder:

1. Ten days at 20%, to past buyers only. Moved 9.
2. Ten days at 20% public. Moved 4.
3. Bundled with his best-selling design, two tees for $46. Moved 11.
4. Free with any order over $60 for the rest of December. Moved 14, and pushed roughly 20 orders from around $34 up over the threshold, which was worth more than the shirts.
5. The last 5 went to a local run club as a giveaway, and two of those people ordered later.

He got about $545 in cash back plus an order-value lift he wouldn't otherwise have had, against a $412 cost. He'd have made more per unit at full price. He would not have made more, because the 43 would still be in the box.

The thing he'd tell you: he ran the same clean-out the following year in the first week of December instead of the third, and it worked much better, because the free-gift rung landed while people were still buying Christmas presents rather than after they'd stopped.

Do it before you buy for next year, not after

Timing matters more than the discount percentage.

Run the clearance while there's still buying happening. The last week of November through the first two weeks of December is ideal in most markets, because the free-gift and bundle rungs need a stream of orders to attach themselves to. Running your clearance on the 4th of January, when nobody is spending, is why January clearances feel so grim.

The other reason to do it before year end: you're about to place next season's orders. Money released from dead stock is money you don't have to borrow, and an empty cupboard is a much better basis for deciding what to buy than a full one you're avoiding looking at.

If a whole line went dead because the thing it was riding stopped being interesting, that's a slightly different problem with its own answer, and it's in when a trend dies mid-order.

Two things to check before you write anything off

The tax treatment isn't obvious, and it varies. In most places the cost of goods comes back to you through cost of sales when they sell, and writing off or donating stock has its own rules about documentation and what you can claim. Ask whoever does your books before you put anything in a bin, and take photographs of what you dispose of. Ten minutes of asking beats a year of guessing.

Some of it isn't dead, it's badly presented. Before you mark something down, check whether it has a bad photograph, a confusing name, or a description that never said what it was. A product with 22 months of cover and one dark, blurry photo taken in a kitchen at night hasn't been tested. Reshoot it, give it two weeks, then decide. That costs an afternoon and it occasionally saves the whole line.

The honest limitation

To do this exercise properly you need to see roughly a year of sales per product, and on Sailo's free plan you get 7 days of analytics. 7 days won't tell you which product is dead. It'll tell you what sold this week, which is the one thing you already know.

Pro is $19 a month and gives you a year, which is exactly the window this decision needs. Business at $49 gives three years and also gives you coupon codes, which is the only way to run a discount code rather than editing the price on the product itself and putting the reason in the description.

If you're on free and doing this now, you'll need your own record: a spreadsheet with units bought, units sold and last sale date per product. That's not a bad thing to keep anyway, and it's the thing you'll wish you'd started in January.

Do this in the last week of November

Sort your products by date of last sale and write down the bottom ten. For each one, work out months of cover. Anything over twelve goes on the list.

Then write the ladder out with actual dates against each rung, all six, before you send a single message. Ten days each. Put it in a calendar so the decision to drop a rung is already made.

Message your past buyers first, at 20%, before anything goes public.

And when the cupboard is clear, work out what you'd have bought instead with that money, because that's the real lesson and it's the one that changes next year's buying. If next year's plan is what you're actually thinking about, planning a year of drops is where to start.