How to Calculate Sell Thru Rate

Sell-Through Rate Calculator

function calculateSellThroughRate() { var unitsSoldInput = document.getElementById('units_sold'); var inventoryInput = document.getElementById('beginning_inventory'); var resultBox = document.getElementById('str_result'); var percentageDisplay = document.getElementById('str_percentage_display'); var summaryDisplay = document.getElementById('str_summary_display'); var sold = parseFloat(unitsSoldInput.value); var inventory = parseFloat(inventoryInput.value); // Validation if (isNaN(sold) || isNaN(inventory)) { alert("Please enter valid numbers for both fields."); resultBox.style.display = "none"; return; } if (inventory <= 0) { alert("Beginning inventory must be greater than zero."); resultBox.style.display = "none"; return; } if (sold inventory) { alert("Error: Units sold cannot exceed the beginning inventory."); resultBox.style.display = "none"; return; } // Calculation var rate = (sold / inventory) * 100; var remaining = inventory – sold; // Interpretation var analysis = ""; if (rate 80) { analysis = "This indicates extremely high demand. While good, ensure you reorder quickly to avoid stockouts."; } else { analysis = "This is generally considered a healthy sell-through rate for most retail sectors."; } // Display Results percentageDisplay.innerHTML = rate.toFixed(2) + "%"; summaryDisplay.innerHTML = "Out of " + inventory + " units, you sold " + sold + "." + "Remaining Stock: " + remaining + " units." + "Analysis: " + analysis + ""; resultBox.style.display = "block"; }

How to Calculate Sell-Through Rate

The sell-through rate (STR) is a fundamental retail metric that measures the efficiency of your inventory management. It compares the amount of inventory received from a supplier against the amount actually sold to customers within a specific period (usually a month). Understanding this metric helps retailers determine if they are overstocking or understocking products.

The Sell-Through Rate Formula

The calculation is straightforward. It is the percentage of your beginning inventory that was sold during the period.

Formula:
Sell-Through Rate = (Units Sold / Beginning Inventory) × 100

Example Calculation

Imagine you run a boutique and you ordered 500 winter jackets (Beginning Inventory) at the start of the season. By the end of the month, you have sold 325 jackets (Units Sold).

Using the formula:

• (325 / 500) = 0.65
• 0.65 × 100 = 65%

Your sell-through rate for the jackets is 65%. This means you have moved the majority of your stock, leaving you with 175 jackets remaining.

Why is Sell-Through Rate Important?

Tracking STR gives you actionable insights into your business performance:

• Inventory Control: It helps avoid "dead stock" (items that sit on shelves and tie up cash) and stockouts (missing sales because you ran out).
• Cash Flow Management: High sell-through rates generally mean faster conversion of inventory into cash.
• Supplier Negotiations: Knowing which products move fast allows you to negotiate better terms for reorders or return slow-moving goods.

What is a "Good" Sell-Through Rate?

While benchmarks vary by industry, a generally healthy sell-through rate falls between 40% and 80%.

• Below 40%: You may have overbought, or the price is too high. Consider running a discount or improving product placement.
• Above 80%: You might be understocked. While high sales are good, running out of stock too quickly means lost potential revenue and disappointed customers.

How to Improve Your Sell-Through Rate

If your calculator results show a low percentage, consider these strategies:

1. Adjust Pricing: Implement markdowns or bundle deals to encourage purchases.
2. Visual Merchandising: Change how the product is displayed in-store or on your website.
3. Marketing Campaigns: Increase visibility through targeted ads or email newsletters.
4. Review Purchasing: For future orders, reduce the quantity of this specific SKU (Stock Keeping Unit).

Use the calculator above regularly to monitor your inventory health and make data-driven decisions for your retail business.