SellThrough Rate Calculator
Table of contents
What is sell through rate?How the sellthrough rate calculator worksHow to increase the sellthrough rate?FAQsWith this sellthrough rate calculator, we help you calculate a metric that can be used to assess the inventory management of your business. The sellthrough rate is one of the most common metrics out there for understanding the health of your inventory in your business.
We have prepared this article to help you understand what sellthrough rate is and how to calculate the sellthrough rate. We will also demonstrate some practical examples to make sure you understand the concept thoroughly.
If you are curious about this topic, check our inventory turnover calculator or ending inventory calculator for better insight.
What is sell through rate?
The sellthrough rate is one of the most important key performance indicators (KPI) of inventory management. The sellthrough rate is defined as the amount of inventory sold within a period relative to the amount of the inventory received or bought.
We commonly use this metric in the retail industry as it assesses how fast the business can sell its inventory and convert it into revenue.
How the sellthrough rate calculator works
To understand how to perform a sellthrough rate calculation, let's take Company Alpha as an example:
 Company name: Company Alpha;
 Duration: 1 month;
 Number of units received: 1,000,000; and
 Number of units sold: 650,000.
The sellthrough rate calculator performs three steps:

Determine the number of units received.
The number of units received is defined as the number of units bought by the business. The
number of units received
is1,000,000
. 
Determine the number of units sold.
The number of units sold is the number of units that the company managed to sell during the time period.
The
number of units sold
is650,000
. 
Calculate the sellthrough rate.
For the last step, let's use the following sellthrough formula:
sellthrough rate = number of units sold / number of units received
Hence, the
sellthrough rate
for Company Alpha is650,000 / 1,000,000 = 65%
over one month.
How to increase the sellthrough rate?
Now, let's talk about how to increase your business's sellthrough rate for. There are generally two ways for businesses to increase their sellthrough rate:

The first option is to increase the number of units sold by increasing sales aggressively. You can achieve this by putting on some promotions that encourage customers to buy more.

The second option is to decrease the number of units received. You can do it by reducing the number of units bought from your suppliers. This can improve the business' inventory management and increase your sellthrough rate.
What is inventory?
Inventory is defined as the stock of goods or materials that a business holds. From the inventory, these items are mainly used for resale or production.
What is inventory management?
Inventory management is about tracking the inventory of a business from production to sale. It helps a business to decide when and how much inventory should it buy so they are never caught short or have unshiftable stock.
Can sellthrough rate be applied to industries other than retail?
Yes! While sellthrough rate is used mostly in the retail industry, it can be applied to other industries, such as the automobile industry. However, it is wise to limit its usage to industries that supply or sell physical goods.
How can I calculate the sellthrough rate?
You can calculate the sellthrough rate using 3 steps:

Determine the number of units received.

Determine the number of units sold.

Apply the sellthrough rate formula:
sellthrough rate = number of units sold / number of units received
What does sellthrough mean?
Sellthrough is the ratio of the number of products sold to the number of products shipped by a supplier, expressed as a percentage. It is a metric corresponding to the net sales for which we use absolute numbers.