When you run a markdown campaign, the system needs to know what you're trying to maximize as the stock sells through. The three objectives below sit on a scale from "protect margin while you clear" to "get it gone at almost any cost." This article explains what each one does and when to reach for it. For the mechanics of how a markdown plans prices toward a deadline, see How Markdown & Clearance Pricing Works.
The three objectives
Objective | What it maximizes | Typical use |
Max Profit | Total profit over the window | Markdowns where you still want to protect margin while moving stock |
Max Revenue | Total sales value over the window | Topline focus; willing to trade some margin for volume |
Clearance | Selling through, almost regardless of margin | "This must be gone by the date." The most aggressive setting |
Discard costs: why leftover stock has a price
This is the idea that makes markdown pricing work. Every unit left unsold at the end of the window carries a discard cost, the value lost to writing it off, storing it, or watching it go out of season. The system builds that penalty into its math: it targets revenue or profit minus the cost of leftovers, not revenue or profit alone.
The size of that penalty is what separates the three objectives. Clearance applies a very high discard cost per leftover unit, which is why it marks down so aggressively: to the math, a unit gathering dust is more expensive than a unit sold cheap. Max Profit applies a much smaller penalty, so it protects margin more.
The intuition: a swimsuit unsold in October isn't worth its sticker price minus a little; it's close to worthless and taking up space. Telling the system that leftover stock is expensive is what makes it willing to discount to move it.
One thing to know about Max Profit and cost data
Max Profit depends on knowing each product's cost, and without it profit can't be calculated. If any product in the batch is missing its cost data, the system can't compute profit for the run, so it switches the whole campaign to Max Revenue and notes it in the run's notices.
If you set Max Profit and the suggestions look more like Max Revenue, incomplete cost data is almost always the reason. Completing your cost data before the run avoids the surprise. (Max Revenue and Clearance don't need cost data in the same way, so they aren't affected.)
Clearance: letting the floor fall
Clearance is the most aggressive mode, and it has a feature the others don't: a floor that falls over time.
Normally a price floor is fixed, and the system won't sell below it. In clearance, the floor starts wherever you set it (or at break-even) and is gradually lowered as the deadline approaches and stock fails to move, eventually allowing a controlled loss to get the last units out the door. If a product's cost is unknown, the floor falls back to a fraction of the starting price, so it never collapses to nothing.
Picture a safety net that's slowly lowered as the season ends: early on, the campaign won't sell at a loss; late, with stock still on the shelf and the deadline looming, it will accept a loss rather than be left holding unsellable inventory.
This behaviour is deliberate and bounded, but it's worth setting the expectation clearly: clearance can and will sell below cost near the deadline if stock isn't moving. That is the point of clearance. If selling below cost isn't acceptable for a given campaign, use Max Profit or Max Revenue with a firm margin-based floor instead. See How to Add Safeguards to Your Pricing Strategy.
Which one should you start with?
If protecting margin still matters, start with Max Profit (with complete cost data), and you'll clear stock while giving up as little margin as the deadline allows. Choose Max Revenue when topline or volume matters more than margin, or when cost data is incomplete. Reserve Clearance for stock that genuinely must be gone by the date and where a controlled loss is acceptable.