Discount Profit Calculator

Method and assumptions

A discount reduces both revenue and the fee base, but most product and fulfillment costs remain unchanged. Use the maximum discount result as a boundary, not a recommended promotion.

Worked scenario

Test a 100 USD regular price, 20% discount and the product current contribution costs. Compare the required volume lift to preserve total contribution, not only revenue. Then add a second scenario with a seller-funded coupon fee or higher return rate if the promotion changes customer behavior.

How to interpret the result

Discounts reduce contribution faster than revenue when unit variable cost does not fall. The required sales lift can become impractical near the contribution floor. Measure incremental orders rather than all promotional orders, and include cannibalization of full-price sales when assessing the event.

Input reference

Currency

Example default: USD

List price per unit

Example default: 50

Discount rate

Example default: 20%

Product cost per unit

Example default: 18

Fulfillment per unit

Example default: 5

Variable fee rate

Example default: 10%

Promotion units

Example default: 100

Common mistakes

• Calculating lift needed to preserve revenue instead of contribution.
• Assuming every promotional order is incremental.
• Omitting coupon charges, returns or fulfillment thresholds.

Before using the result

1. Compare regular and promotional unit contribution.
2. Set a maximum discount from the desired profit floor.
3. Evaluate incremental contribution after the campaign closes.

Questions to check before deciding