Automatic markdowns: good idea?

[pricetack pb]

Wanted to get everyone's opinion a selling format: automatic markdowns (does anyone remember Filene's Basement?). There's an initial price which is marked down on a schedule until it sells. Buyers can buy immediately at the prevailing price or wait for a discount. However if they wait, someone else might snag it. Could be a day between markdowns, a week, a month, whatever.

Could you see this being a useful way to sell certain items? I'm thinking about semi-unique items that you might consider putting on Ebay or Craigslist. But also closeout type merchandise that you put on sale for half off (or whatever).

Do you think buyers would understand how this works? And not think it's a gimmick? Would it be too much work to sell individual items?

[piatkow]

If you are publicising the markdown then do check on legislation covering consumer protection and misrepresentation in your jurisdiction. Where I live a product has to be on sale at full price for a predetermined time before you can claim a markdown.

[CPC_Andrew]

It might be hard to push product too unless you are able to communicate extremely effectively with your market. If there are potential new customers that buy at a higher price, then learn about your marketdown strategy, it may create a bad customer experience.

There's lots of different, more intuitive ways to discount products.

[jwolthuis]

There's an initial price which is marked down on a schedule until it sells

This idea works when shoppers have perfect information, and there are lots of buyers (and not many sellers).

Many times a markdown occurs, not because shoppers are waiting for the lower price, but simply because there aren't enough of them to go around, or they don't see your listing at the right time (their buying time).

What you end up doing is selling at a discount to casual shoppers who stumble upon your product listing. These shoppers would have paid more, but they thank you for a good deal. You end up with less revenue.