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Markdown Money- which is basically a safety net for the retailer that you guarantee them a certain percentage will sell through at full price and if it doesn;t sell the store can charge “you” the designer markdown money to make up for their profit loss in having to markdown the goods in order for them to sell.

A good example is if you sign a contract or agree with a retailer that 60% of your goods will sell through at $24 and 65% sell through at $24 than you don’t owe them any markdown money, if only 48% of the goods sell through they can request that you pay them their markdown money and once you honor you half of the deal you will pay them the remaining 12% that didn’t sell through and maybe even the 52% depending on the nature of the deal.

This is a good way to take the pressure of the retailer when they are hesitant about ordering, but be careful and make sure your guarantee will follow suit on your behalf in most cases. This kind of deal can have a negative affect on your small apparel companies’ bottom line. Negotiate with the retailer and see if you can come up with a deal where they agree to order so many of a garment if you allow them a certain amount of a ?% of markdown money.

Fashion Industry Ceo

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