Pricing and margin protection
Most discount damage is not caused by discounting too much. It is caused by discounting evenly across products that do not have the same margin to give.
The problem
A sitewide 20% code lands on a product with 55% contribution and on one with 18%. The first survives. The second is now sold at a loss, and the promotion report still shows extra revenue.
Repeat codes also train a segment of customers to never buy at full price, which permanently shifts your average realised margin down.
How to measure it
Allocate every discount to the specific units it was applied to, then recompute contribution for those units.
Compare promotional periods against a non-promotional baseline on contribution, not on revenue.
Calculate the break-even volume uplift a discount needs — a 20% discount on a 40% margin product needs a 100% volume increase just to stand still.
What to change
- ◆Set a maximum discount per product based on its contribution, not a single sitewide rule.
- ◆Exclude thin-margin items from automatic codes.
- ◆Replace blanket discounts with bundles or thresholds that raise basket value.
- ◆Review the codes that generate the most revenue and the least contribution first.
Estimates, not your numbers. Everything on this page is based on public ecommerce benchmarks and the signals a public storefront exposes. It is an indication of where profit typically leaks — not a measurement of your finances. Connect your store to replace estimates with your actual numbers.
Frequently asked questions
How much volume does a discount need to break even?+
Required uplift = discount / (margin − discount). At a 40% contribution margin, a 20% discount needs a 100% volume increase to break even. The discount profit calculator does this for your own figures.
Are discounts always bad?+
No. They are a tool for clearing stock, acquiring customers and shifting slow lines. The problem is applying them without knowing which products can afford them.