From Mass Discounting to Consumer-Focused Lifecycle Pricing

Markdowns are inevitable in retail. Seasonality, trend shifts and unpredictable demand guarantee that not every SKU sells at full price. The default tactic has long been an overreliance on blanket discounting, 20% off across categories mid-season, 40% off at the end. Simple, but dangerously costly.
For brands and retailers balancing margin protection, customer trust and brand value, a new approach is required: lifecycle pricing.

Read on to discover:

• Why a markdown strategy matters now more than ever.
• The real cost of blanket discounts.
• How to lead with data-backed clarity that drives both profitability and resilience.
• How to gain 1%–3% gross margin improvement.

Plus, dive into a real-world case study to learn how Centric Software® enables lifecycle pricing for one global fashion retailer, transforming its markdown strategy and improving gross margin by 3% in pilot markets.

Markdowns are inevitable in retail. Seasonality, trend shifts and unpredictable demand guarantee that not every SKU sells at full price. The default tactic has long been an overreliance on blanket discounting, 20% off across categories mid-season, 40% off at the end. Simple, but dangerously costly. Promotions are also often layered in at set points on the retail calendar (e.g., holiday events or clearance weekends), but when poorly timed, they compound margin pressure rather than stimulate incremental demand.

The reality is that by the time broad markdowns are applied, peak demand has already passed. Profitable sales are missed, and margin is sacrificed. According to IHL Group, inventory distortion, which is the combined cost of overstocks and out-of-stocks, was valued at $1.7 trillion globally in 2024.  Even into 2025, it remains a trillion-dollar drag on the industry. For brands and retailers balancing margin protection, customer trust and brand value, a new approach is required: lifecycle pricing.

The psychology of discounting

Markdowns influence consumer behavior in subtle but powerful ways:

• Thresholds: Discounts below a certain level feel meaningless to shoppers, while overly steep cuts erode perceived value.
• Timing: Delayed markdowns miss peak interest windows; premature markdowns waste margin potential.
• Framing: The difference between “25% off” and “$50 off” changes how customers perceive the offer, even if financially identical.

The same principles apply to promotions. Poorly timed or overly predictable promotions can train customers to wait, while well-framed promotions tied to urgency (e.g., limited time offers) can drive incremental demand.
Studies show that increasing markdowns too aggressively can even backfire, reducing total sales rather than increasing them.3 Among these factors, timing is often the decisive lever. The right discount at the right moment maximizes impact, while poor timing risks leaving both revenue and shopper engagement on the table.

Case study: How a global fashion retailer transformed its markdown strategy

A global fashion retailer with dozens of markets relied on flat markdowns of 20%–40% at fixed calendar intervals. Smaller regional teams lacked the resources to tailor discounts or align promotions, so they defaulted to blanket approaches.

Challenge: Margin erosion and brand dilution, particularly in smaller markets.

Solution: The company implemented lifecycle pricing supported by automation and predictive demand forecasts. Pricing became SKU-specific, responsive to local demand and governed by leadership-defined rules.

Results:

• Gross margin improvement of 3% in pilot markets.
• ROI is achieved on one channel within a single season.
• More consistent brand identity globally.

This demonstrates how lifecycle pricing balances profitability with long-term brand equity.

The business case

Even modest improvements in markdown management unlock significant value. Analyses show that retailers can expect a 1%–3% gross margin improvement, with some cases reporting even higher gains depending on category.

For large retailers, that equates to millions in profit recovered annually. Combined with the organizational and brand benefits, the business case for lifecycle pricing is undeniable.

Practical steps to get started

Retailers can begin their lifecycle pricing journey in five clear steps:

1. Audit: Assess current markdown practices to identify profit leakage.
2. Rules: Define guardrails for acceptable discount levels, categories and timelines.
3. Forecast: Integrate demand forecasting into markdown decisions.
4. Pilot: Test lifecycle pricing in a focused market or category.
5. Scale: Roll out with automation, ensuring consistency across channels and regions.

This phased approach allows teams to prove ROI and build internal confidence before scaling enterprise wide.

How Centric Software enables lifecycle pricing with Centric Planning and Centric Pricing & Inventory

Moving from blanket discounting to lifecycle pricing requires more than strategy; it demands the right technology foundation. Centric Planning™ and Centric Pricing & Inventory™ transform markdown management from reactive to proactive, with data-driven precision.

Here is how it delivers value across the lifecycle:

• AI-powered markdowns and promotions that adapt to real-time sales, demand and inventory.
• SKU-level pricing decisions that protect profitable items while clearing slow movers, faster.
• Localized strategies that balance global brand guardrails with market-specific flexibility.
• Predictive demand insights that flag slow movers weeks in advance to protect margin.
• Automated execution across channels ensures accuracy, consistency and speed at scale.

Blanket discounting belongs to yesterday. Lifecycle pricing is today’s smarter, more disciplined alternative. By aligning markdowns and promotions with SKU performance, demand forecasts and local dynamics, retailers protect profit while reinforcing brand equity.

The evidence is clear: lifecycle pricing delivers margin gains, operational efficiency and brand consistency. Those who act now will capture a competitive advantage; those who delay risk margin leakage and eroded trust.

Ready to see how lifecycle pricing works for your business? Book a demo with Centric Software today and discover how to turn discounts into discipline.

Centric Software® (centricsoftware.com)

From its headquarters in Silicon Valley, Centric Software provides an innovative and AI-enabled product concept-to-commercialization platform for retailers, brands and manufacturers of all sizes. As experts in fashion, luxury, footwear, outdoor, home, food & beverage, cosmetics & personal care as well as multi-category retail, Centric Software delivers best-of-breed solutions to plan, design, develop, source, comply, buy, make, price, allocate, sell and replenish products.

• Centric PLM™, the leading PLM solution for fashion, outdoor, footwear and private label, optimizes product execution from ideation to development, sourcing and manufacture, realizing up to 50% improvement in productivity and a 60% decrease in time to market.
• Centric Planning™ is an innovative, cloud-native, AI solution delivering end-to-end planning capabilities to maximize retail and wholesale business performance, including SKU optimization, resulting in an up to 110% increase in margins.
• Centric Pricing & Inventory™ leverages AI to drive margins and boost revenues by up to 18% via price and inventory optimization from pre-season to in-season to season completion.
• Centric Market Intelligence™ is an AI-driven platform delivering insights into consumer trends, competitor offers and pricing to boost competitivity and get closer to the consumer, with an up to 12% increase in average initial price point.
• Centric Visual Boards™ pivot actionable data in a visual-first orientation to ensure robust, consumer-right assortments and product offers, dramatically decreasing assortment development cycle time.
• Centric PXM™, AI-powered product experience management (PXM) encompasses PIM, DAM, content syndication and digital shelf analytics (DSA) to optimize the product commercialization lifecycle resulting in a transformed brand experience. Increase sales channels, boost sell through and drive margins.

Centric Software’s market-driven solutions have the highest user adoption rate, customer satisfaction rate and fastest time to value in the industry. Centric Software has received multiple industry awards and recognition, appearing regularly in world-leading analyst reports and research.

Centric Software is a subsidiary of Dassault Systèmes (Euronext Paris: #13065, DSY.PA), the world leader in 3D design software, 3D digital mock-up and PLM solutions.

Centric Software is a registered trademark of Centric Software, Inc. in the US and other countries. Centric PLM, Centric Planning, Centric Pricing & Inventory, Centric Market Intelligence, Centric Visual Boards and Centric PXM are trademarks of Centric Software, Inc. All third-party trademarks are trademarks of their respective owners.