Blog · Territory, capacity and quota planning
Pricing analytics connects realized prices with inventory movement and gross profit. Use a store and SKU export to compare markdown depth, sell-through and margin without confusing higher sales with better returns.
Pricing analytics in retail compares the price customers paid with the stock sold and gross profit earned. Calculate realized price, markdown depth, sell-through and gross margin on the same store, SKU and period. A clearance decision can improve stock movement while leaving fewer gross profit dollars.
The practical question is specific: which stores moved the same item at an acceptable margin, and which exchanged too much margin for additional units? Broader retail analytics covers the surrounding operating picture; this method isolates the pricing evidence.
Export transaction date, store, SKU, units, original ticket price, gross merchandise sales, discounts, returns and net merchandise sales. Add opening inventory, receipts and transfers for the period, plus the cost of the units sold. Preserve transaction identifiers so returns and duplicate export rows can be checked.
Keep sales tax outside merchandise revenue. Use one consistent cost definition across stores. The IRS description of purchased merchandise cost includes invoice cost after appropriate discounts and acquisition charges such as transportation. Your management report should document which of those costs the merchandise ledger includes.
Join costs by SKU and the applicable cost period, rather than attaching the latest purchase cost to every historical sale. An item that changed supplier cost needs the cost associated with the recorded sale. Tie the resulting total to the merchandise cost report before interpreting its margin.
For each store, available units here mean opening stock plus receipts and net transfers during the period. This example has no returns, shrink or inventory write-offs. In a live file, reconcile those movements separately and state how saleable returns affect the inventory base.
A US apparel retailer compares the same jacket across two stores during one clearance period. Its original ticket price is unchanged. These are the input rows, with units measured as individual jackets:
| Store | Available units | Units sold | Original ticket per unit (USD) | Net sales (USD) | Cost of goods sold (USD) |
|---|---|---|---|---|---|
| A | 200 | 100 | 50 | 4,500 | 2,500 |
| B | 200 | 150 | 50 | 5,250 | 3,750 |
| Total | 400 | 250 | 50 | 9,750 | 6,250 |
Use the following definitions:
Realized price = Net sales / Units sold
Realized markdown depth = 1 − Net sales / Original ticket value of units sold
Sell-through = Units sold / Available units
Gross profit = Net sales − Cost of goods sold
Gross margin = Gross profit / Net sales
Realized markdown depth is the effective reduction from the original ticket, including transaction discounts in net sales. It is different from the percentage printed on a clearance sign. For a mixed assortment, original ticket value means the sum of each sold unit multiplied by its own original ticket price.
| Store | Realized price (USD) | Markdown depth | Sell-through | Gross profit (USD) | Gross margin |
|---|---|---|---|---|---|
| A | 45.00 | 10.0% | 50.0% | 2,000 | 44.4% |
| B | 35.00 | 30.0% | 75.0% | 1,500 | 28.6% |
| Total | 39.00 | 22.0% | 62.5% | 3,500 | 35.9% |
Money is shown to two decimal places where needed; percentages are rounded to one decimal place. Calculations retain the unrounded values. The total markdown is 1 − 9,750 / (250 × 50) = 22.0%, and total margin is 3,500 / 9,750 = 35.9%.
Put the first input table in columns A through F, with store A on row 2 and store B on row 3. Enter these formulas in G2 through K2 respectively, then fill down:
=IF(C2=0,NA(),E2/C2)
=IF(C2*D2=0,NA(),1-E2/(C2*D2))
=IF(B2=0,NA(),C2/B2)
=E2-F2
=IF(E2=0,NA(),J2/E2)
For a larger transaction export, aggregate net sales by store, SKU and period before dividing. Microsoft documents SUMIFS as summing values that meet multiple criteria. If columns A, B and C contain store, SKU and date, and H contains net sales, use:
=SUMIFS(H:H,A:A,M2,B:B,N2,C:C,">="&O2,C:C,"<"&P2)
M2 and N2 hold the selected store and SKU. O2 holds the inclusive start date; P2 holds the exclusive end date. Apply the identical criteria to units and cost. Excel is a Microsoft product; Covirage is not affiliated with Microsoft.
Two identities must hold. Revenue is 100 × 45 + 150 × 35 = $9,750. Gross profit is 100 × (45 − 25) + 150 × (35 − 25) = $3,500, which also equals $9,750 − $6,250. If either check fails, inspect mismatched units, costs or transaction filters.
Store B sold 50 more jackets but earned $500 less gross profit. Holding store A's volume as the starting point, the $10 lower price costs 100 × $10 = $1,000. The additional 50 units earn 50 × ($35 − $25) = $500. Together, those changes explain the $500 shortfall.
That comparison describes the result; it does not prove that the markdown caused extra demand. Store traffic, weather, size availability and selling days may differ. Use retail execution analytics to investigate availability, and fashion retail analytics for the seasonal assortment context.
Bring a sales export with store, SKU, units and realized revenue, together with matching inventory and cost files. Covirage maps the columns; its tools compute and check the pricing and margin comparisons, and the external AI model explains the results with every figure traced to its rows. Create a free Covirage account and bring a sample of your own data.
See customer profitability analysis for the supporting margin perspective.
A markdown usually changes an item's ticket price, while a discount may apply only to a transaction or eligible customer. An effective reduction calculated from net sales includes both unless the export separates them. Label the measure clearly.
Higher sell-through shows that more of the available stock sold. It does not establish whether the price decision increased gross profit or caused the additional sales. Review unit margin, remaining inventory and comparable trading conditions before drawing that conclusion.
Use realized price to measure the revenue actually earned per unit. Keep the original ticket price as a reference for reduction depth. Retain both fields so a ticket change cannot erase the historical baseline used to evaluate clearance.