Discount & Promo Calculator
Calculate sale price, discount %, and how promos affect profit. Avoid the most common dropshipping mistake: discounting into a loss.
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The Mathematics of Discounting: Why Most Dropshipping Sales Lose Money
Discounting is the most abused tactic in ecommerce. Store owners run a 20%-off promotion assuming it will "drive volume," without doing the math on whether the conversion lift offsets the margin hit. The result: a "successful" sale that destroyed a month of profit. This calculator exists to make sure that does not happen to you.
The Break-Even Conversion Lift Formula
When you discount, two things happen: (1) profit per order drops, and (2) conversion rate rises. The question is whether (2) is large enough to compensate for (1). The break-even conversion lift is the percentage increase in conversion rate you need just to make the same total profit you made before the discount.
Break-Even Conversion Lift = (Profit Per Order at Full Price ÷ Profit Per Order at Discount) − 1
If your profit per order at full price is $20 and at a 20% discount it is $10, you need a 100% conversion lift — double your normal conversion rate — just to break even on the promotion. Anything less and the discount cost you money.
Worked Example: A 20% Discount Is Not "20% Off Profit"
Product sells for $49.99. Total cost per sale (product + ads + fees + shipping) is $24. Full-price profit = $25.99. Now apply a 20% discount: sale price = $39.99. Profit per sale = $15.99. You have not lost 20% of profit — you have lost 38.5% of profit. To make the same total profit, your conversion rate must rise by 62.5% (from, say, 2% to 3.25%). If your discount only lifts conversion by 30%, you have lost money on the sale.
When Discounting Actually Works
Discounts work when the conversion lift dramatically exceeds the break-even threshold. This typically happens in three scenarios:
- First-order discounts for LTV-rich products. If your LTV is $80 and your first-order profit is $20, you can discount aggressively to acquire customers, because the lifetime profit covers it.
- Inventory liquidation. If a product is dead stock (or in dropshipping, if the trend is fading), discounting to convert is better than holding.
- Black Friday / Cyber Monday. Buyers are in a "buy now" mindset and conversion lifts of 100–200% are achievable. Discounts that lose money in March print profit in November.
Discounting Anti-Patterns to Avoid
1. Permanent discounts. A "sale" that never ends trains customers to wait and devalues your brand. Run sales for a defined window and end them on time.
2. Stacking discounts. "20% off + free shipping + $10 coupon" can easily push a profitable product into a loss. Never allow stacking without checking the math.
3. Discounting to drive traffic instead of conversion. Discounts lift conversion, not traffic. If your traffic is the problem, fix your ads — discounts will not help.