What is discount depth?

Discount depth is the average size of the markdown on discounted products. A product with a full price of $100 selling at $70 has a discount depth of 30%.

Read together with markdown breadth: breadth says how many products are discounted, depth says by how much.

Discount depth = average over marked-down SKUs of (full price - selling price) / full price

Three SKUs are on sale: $100 selling at $70 (30% off), $50 at $40 (20% off) and $80 at $40 (50% off).

Discount depth = (30% + 20% + 50%) / 3 = 33.3%.

For each discounted SKU, Data Purl computes (full price minus selling price) divided by full price, then averages across SKUs in the group. Simple (unweighted) averages are the default so that a single high-priced item cannot dominate.

Deepening discounts are a stronger margin signal than broadening ones, because they cut directly into the gross margin earned on each unit sold.

Depth by price tier shows whether a brand is clearing old stock or repositioning the whole range.

• Retailer 'was' prices are not always genuine full prices. Using the brand's own site as the reference price reduces this bias.

• Tracking a company's pricing power with eCommerce data
• Using markdowns as an early inventory and gross-margin signal
• Tracking holiday and event promotions year on year