Know the deepest discount that still pays you
Calculate your maximum viable discount from real costs, check contribution margins across discount bands, and protect cash flow.
What it does
- Gives you the closed form for the deepest discount where contribution per order still lands above zero, with payment fees correctly scaling with the discounted price.
- Shows contribution, margin on revenue and a verdict word at thirteen discount depths, so you can see the cliff rather than just the last good row.
- Works out the extra units you would need to sell to hold the same total contribution, then leaves the blank for you to check whether you can sell them.
- Includes a one page approval rule sheet with hard never-approved cases, and the three legitimate ways to discount: change quantity, take the money from a supplier, or discount where the real cost is holding cost.
Resource Teaser Preview
maximum viable discount = 1 - (cost of goods + shipping per order)
/ (retail price x (1 - payment fee percentage))To unlock the full kit, complete prompt set, and automated workflow, request access below.
What you need
- Cost of goods per unit for the product, from your supplier invoice rather than a memory.
- What a shipping label and handling actually costs you, return rate included.
- Your payment processing fee percentage and units sold per month at your current discount.
Setup
- Open contribution-by-discount-band.md and fill in the four inputs at the top.
- Read the whole table, not just the band you are considering, and note where the verdict turns to losing money on every order.
- Calculate the maximum viable discount from the floor formula at the bottom of the file.
- If you are moving to a deeper discount, work the volume line and check the extra units against your real recent sales.
- Fill in markdown-approval-rules.md with your own thresholds and get the person who can stop you to agree to it before the next sale.
On a real store
A fictional homeware brand pricing one item at 120 dollars finds its maximum viable discount is 52.8 percent, sees the cliff between 40 and 50 percent where fixed shipping stops shrinking, calculates it would need 57 percent more units to hold contribution at 40 percent off, and instead uses a two-item set at 25 percent off the pair plus a written supplier-funded markdown on discontinued lines. Invented numbers, shown so you can follow the arithmetic.
Frequently Asked Questions
How many extra sales will a deeper discount get me?
We do not know and we will not invent it. The kit works out how many extra units you would need to hold the same contribution, and then tells you to go and check whether you can sell them. Your products and your customers decide that, not a worksheet.
Does the kit handle bundles?
It handles them by insisting you calculate them as a bundle. Two items at 20 percent off each is not 20 percent off the pair, because the second unit still has a full cost of goods attached to it.
What if a supplier is funding the discount?
Then the margin is real, but only once it is in writing. The approval sheet lists verbal supplier contributions under never approved, because they tend not to survive a busy month.
Want this done for you instead?
We run the whole audit for you: a scored read of your store, what's costing you sales this week, and what to fix first. $500, most stores get it back in the first fix.
Get the $500 audit