Worked example

Original price$100
Variable costs$60
Original profit$40
20% discount profit$20
Discounted profit = discounted price × (1 − fee rate) − fixed variable costs

Price falls faster than many costs

Product cost, pick-and-pack, packaging and much of shipping usually do not decline when price is discounted. Percentage fees may decline, but fixed charges do not.

That is why discount percentage and profit reduction percentage are rarely equal.

Calculate required volume, not just margin

If profit falls from $40 to $20, the seller must make twice as many sales to earn the same total contribution before overhead.

Higher conversion may offset the reduction, but the required lift should be calculated before the campaign.

  • Compare profit per order before and after
  • Calculate sales volume needed to match baseline profit
  • Include increased ad competition and returns

Use bundles or thresholds when possible

A bundle or minimum-spend discount can lift order value while spreading fulfillment cost across more items.

The correct structure depends on product margin, shipping tiers and customer behavior, so test the full basket economics.

Use your numbers

Turn the example into your estimate.

The calculator keeps every assumption visible and updates the result as you type.

Test a Discounted Price ↗