A 20% discount can need twice the orders
The volume lift required to survive a discount is far larger than it feels, and past a certain depth no amount of volume rescues it.
Your numbers
Before the discount.
COGS, shipping, fulfilment, payment fees. Not overhead.
100% for a sitewide sale. Lower for a targeted code.
What you'd have sold without the promotion.
Volume lift needed to break even
+80%
800 extra orders on top of 1,000.
Contribution before
$54
45% of order value.
Contribution after
$30
Down 44% per discounted order.
Discount ceiling
45%
Where contribution reaches zero. Never go here.
Baseline profit at risk
$54,000
Total contribution you're discounting against.
Standing still requires 80% more volume, which very few promotions achieve. At 45% margin a 20% discount is giving away 44% of the contribution on every redeemed order. A smaller discount, or a non-price offer like free shipping or a bundle, will usually cost less.
Calculated in your browser — nothing is sent anywhere, and nothing is stored.
The maths, so it isn't a black box.
It works from contribution, not gross margin
Order value minus every variable cost of fulfilling it — goods, shipping, fulfilment and payment fees. Gross margin overstates what you have to give away, which is why discounts modelled on it look more affordable than they are.
The discount hits your baseline too
A sitewide sale discounts the orders you would have won anyway, not just the incremental ones. That is the whole reason the required lift is so large, and it is the step most back-of-envelope calculations skip.
Redemption share handles targeted codes
For a code only some customers use, the discount applies to a fraction of orders and the blended contribution is higher. Set it to 100% for a sitewide sale, lower for a targeted offer, and the required lift moves accordingly.
It shows the depth where volume stops helping
Once the discount exceeds your contribution margin, every redeemed order sells below variable cost and selling more makes the loss larger. That ceiling is a hard number and worth knowing before anyone proposes a headline figure.
Questions about this calculation
Because the discount comes out of contribution, not out of revenue. If you keep $50 on a $120 order and discount 20%, you have given away $24 of a $50 margin — nearly half. Standing still then needs roughly double the orders. The discount looks like a fifth off to a customer and is close to half your profit per order, and that asymmetry is what makes promotions so easy to lose money on.
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