What does a discount really cost?
A discount is taken off the price, but it is paid for out of the profit, and the profit is a much smaller number. Take 20% off a $90 product that makes $45 and you have given away $18 of a $45 profit: a 20% discount that is a 40% pay cut on every unit.
Profit per unit = price − product & shipping − price × fees
Every discount calculator on the web tells you the new price. This one tells you what the price does to the profit per unit, how many more units you have to sell just to get back to where you were, and whether the lift you actually expect gets there. It is the arithmetic that catches almost every brand at least once, usually in the best revenue month they have ever had.
The price, the profit and the lift
Three steps, each worked through on the calculator’s example: a $90 product that costs $42 to buy and ship, 900 units a month, a 20% sale.
Profit per unit, before and after
At full price the unit makes $44.85 after goods, shipping and 3.5% in fees. Take 20% off and the price is $72, but the goods and shipping still cost $42; only the fees fall, because they are a percentage. The discount was 20% of the price and 39% of the profit, and that gap is the whole lesson of the page.
Sale price = full price × (1 − discount)
Example$90 → $72 on sale. Profit per unit $44.85 → $27.48, a 38.7% drop.
The lift you need
To make the same money on sale you have to sell enough extra units to cover the profit lost on every one. Divide the old profit per unit by the new one. Any sale that does not clear that lift has reduced your profit, whatever it did to revenue.
Lift needed = (full-price profit ÷ sale profit) − 1
Example$44.85 ÷ $27.48 − 1 = +63%: 900 units become 1,469 just to stand still.
The month at your expected lift
Enter your normal monthly units and the lift you honestly expect, and the calculator plays the month out both ways. The thinner your margin, the more savage the sale: at a 50% margin a 20% discount removes 40% of the profit per unit; at 35% it removes 57%.
Profit on sale = units × (1 + expected lift) × sale profit per unit
ExampleA 30% lift takes revenue from $81,000 to $84,240 and profit from $40,365 to $32,152. More sales, more revenue, $8,213 less money.
What the calculator leaves out, on purpose: the customers you acquire during a sale who buy again at full price, the stock you cleared that would otherwise have been written down, and the full-price buyers who would have bought anyway and now pay less. The first two are the reasons to run a sale; the third is the reason most sales lose more than this page shows.
How deep sales go, and how often they pay
The lift a discount needs depends only on your margin and the depth of the cut. Before the numbers from the market, the table that matters most is this one:
| Your margin | 10% off | 20% off | 30% off |
|---|---|---|---|
| 30% | +50% | +200% | never pays |
| 40% | +33% | +100% | +300% |
| 50% | +25% | +67% | +150% |
| 60% | +20% | +50% | +100% |
| 70% | +17% | +40% | +75% |
Set that against what sales actually run at. Peak online discounts off list price across the 2025 US holiday season, by category:
| Category | Peak discount |
|---|---|
| Electronics | 30.9% |
| Toys | 29.6% |
| Apparel | 25.1% |
| TVs | 24.3% |
| Computers | 23.4% |
| Sporting goods | 20.3% |
| Appliances | 20.2% |
| Furniture | 18.8% |
A 25% cut on apparel at a 50% margin needs a doubling of unit sales. Few promotions lift units anywhere near that, and much of a sale month’s volume is demand that was already coming, pulled forward from the weeks either side and sold at a lower price. That is why Nielsen, looking at 39 million US packaged-goods promotions, found that almost three-quarters did not break even, and Simon-Kucher puts the share of retail promotions that lose money at 60–70%.
The direction is encouraging. Across 10,000 Klaviyo brands, discounts over the five days of Black Friday and Cyber Monday 2025 averaged 26.2%, 10% shallower than the year before; the daily average never passed 30% outside home & garden, and the brands offering the smallest discounts grew fastest, up 14% on the year. In Australia, where 3.1 million households spent $1.5 billion online over Black Friday and Cyber Monday 2025, the average online basket for the year fell to $96, $10 below 2020: shoppers are buying more often, not bigger, and a flat discount makes the basket smaller still.
How to make a sale pay
None of this means never discount. It means discount for a reason the calculator can see, and structure the offer so the lift it needs is one you can actually get. Seven ways, in the order we would try them.
1.Decide the lift before the discount
Run last year’s sale through the calculator with the lift it actually produced. If a flat discount cannot clear that lift, you have your answer before a single ad is made. In the example, a 30% lift pays for at most a 12% discount; at 20% it loses $8,213 for the month.
2.Go shallower
The lift needed climbs much faster than the discount. At a 50% margin, 10% off needs a 25% lift and 20% off needs 67%. Klaviyo’s data has 10–15% off converting as well as deeper cuts, and the brands discounting least growing fastest. Start at 10%.
3.Put a floor under it
“20% off over $120” lifts the basket at the same time as it discounts, and the extra units in the basket carry no extra shipping. The margin on the add-on pays for the discount on the rest. The AOV calculator shows what the bigger basket is worth.
4.Give value at cost, not at price
A gift worth $20 to the customer might cost you $6, so the offer feels like 20% off a $100 order while costing you 6%. Free shipping above a threshold and a bonus unit work the same way. Run them through the calculator by adding the gift’s cost to the product and shipping field and setting the discount to zero.
5.Sell the bundle, not the single
A set discounted 15% often makes more per order than a single product at full price, because the second and third items share one parcel and one click. Price the bundle on its own margin, not on the headline percentage.
6.Discount for new customers and for clearance, and measure it
Clearing stock that would otherwise be written off is a different calculation, because the alternative is zero. Winning a first order from someone who will buy again at full price is a different calculation too: the discount is an acquisition cost, and a known one. The CAC & LTV calculator puts a value on it. Count the share of sale buyers who were new and how many came back, and next year’s sale is an investment rather than a habit.
7.Buy the reach to match the lift
A discount only lifts sales among people who hear about it. If the sale needs 60% more units, the creative and the media behind it have to find 60% more buyers, which is a plan, not a code. That is what Paid Advertising and Ad Creatives build around a launch.