What is discount profit?
Discount profit is what an order earns after you take a discount off the price. A discount does not only lower revenue: because the cost of the product and most of the cost of delivering it stay the same, the whole price reduction comes out of profit. That is why a small discount can feel painless on the price tag and be expensive on the profit line.
How discounts affect profit margin
Margin is profit divided by what the customer pays. A discount shrinks the profit and the amount paid, but the profit shrinks faster, so the margin falls. On a $100.00 product that costs $60.00, a 10% discount takes the margin from 40.00% to 33.33%: a change of −6.67 pp. Margin changes are written in percentage points, because they compare two percentages with each other.
Why a 10% discount can reduce profit by more than 10%
The discount is 10% of the price, but the profit is a smaller number than the price. Here the price is $100.00 and the profit is $40.00. A 10% discount removes $10.00, which is 25.00% of the $40.00 profit, not 10%. The thinner the margin, the bigger the share a given discount takes. With no fees the profit falls by roughly the discount times the price divided by the profit.
How to calculate profit after a discount
- Discounted price = original price × (1 − discount %).
- Revenue per order = discounted price + any shipping you charge.
- Recalculate percentage fees on the new amounts, and keep fixed fees, shipping cost and packaging the same.
- Profit per order = revenue − product cost − shipping − packaging − fees − advertising.
- Compare with the profit before the discount.
Do not simply subtract the discount from the old profit when there are fees: percentage fees fall with the price, so the real drop is a little smaller than the discount amount.
How to calculate additional orders needed
Baseline total profit = profit per order before × current orders
Required orders = baseline total profit ÷ profit per order after, rounded up
Additional orders = required orders − current orders
Orders are whole numbers, so the result is rounded up and then checked: the rounded number of discounted orders earns at least the baseline. This only works when each discounted order earns a profit. If it earns zero or loses money, no number of orders can reach the baseline, and the calculator explains that instead of showing a number.
Discount percentage vs profit percentage
- Discount percentage is a share of the price: 10% of $100.00 is $10.00.
- Profit change percentage is a share of the old profit: $10.00 of $40.00 is 25.00%.
- Margin change in percentage points compares two margins: 40.00% to 33.33%.
Example: 10% discount on a $100 product
Simple version. The product sells for $100.00 and costs $60.00. There are no fees, shipping or advertising, and you sell 100 orders. Everything here uses cost and price only.
| Profit per order before | $40.00 |
|---|---|
| Profit per order after (price $90.00) | $30.00 |
| Profit change per order | −$10.00 (−25.00%) |
| Total profit at 100 orders: before → after | $4,000.00 → $3,000.00 |
| Orders needed to keep the same total profit | 134 (+34) |
| Required increase | +34.00% |
With shipping and fees. Now the customer pays $8.00 shipping, you pay $9.00 to ship and $1.00 for packaging, the platform takes 8% of the customer payment, and payments cost 3% + $0.30. Advertising is not included and neither is tax. Profit per order goes from $25.82 to $16.92, a change of −$8.90 (34.47%), and you would need 153 orders instead of 100 to earn $2,582.00 again. The extra costs mean the profit drop is not simply 10%: the percentage fees shrink a little, but shipping and fixed costs do not.
Comparing 5%, 10%, and 20% discounts
| Discount | Profit per order | Margin | Orders needed |
|---|---|---|---|
| 5% | $35.00 | 36.84% | 115 (+15) |
| 10% | $30.00 | 33.33% | 134 (+34) |
| 20% | $20.00 | 25.00% | 200 (+100) |
Doubling the discount from 10% to 20% does not double the extra orders you need: it takes you from 34 to 100 additional orders, because each order earns less and less.
When discounts become unprofitable
In the simple example a 40% discount brings the price down to $60.00, the same as the cost, so each order earns $0.00. At 50% each order loses $10.00. Past that point selling more only increases the loss, which is why no order count is shown. With fees and shipping the limit comes sooner than the simple price-minus-cost result suggests.
Limitations and assumptions
- All amounts exclude sales tax, VAT and GST. No income tax or currency conversion is applied.
- The order volume is an example until you replace it with your own for the period you care about.
- Every order is assumed to have the same price and costs. Real orders vary.
- Advertising is a fixed amount per order, so it does not fall with the price. A percentage-of-revenue ad cost would.
- The calculator does not predict demand. It shows how many orders would be needed, not whether a discount will bring them, and it does not assume that discounting increases sales.
- Returns, refunds and chargebacks are not included. Default fee rates are examples, not any platform's real fees.
For the profit of a single order, see the E-commerce Profit Calculator; to find a price for a target margin before you discount, use the Selling Price Calculator.
Frequently asked questions
Why does a 10% discount cut profit by more than 10%?
The discount comes off the price, but your costs stay the same, so the whole price reduction is taken from profit. If the profit is a small share of the price, the same dollars are a large share of the profit. On a $100 product with $40 profit, a $10 discount removes a quarter of it.
What is the difference between margin points and percent change?
Margin change is shown in percentage points: a margin that falls from 40% to 33.33% has dropped 6.67 percentage points. Profit change per order is a percent of the old profit: from $40 to $30 is a 25% drop. They answer different questions, so do not mix them.
How are the additional orders calculated?
The baseline is your profit per order before the discount multiplied by your current orders. The calculator divides that by the profit per order after the discount and rounds up to whole orders, then checks that the rounded number reaches the baseline.
Does a discount bring more orders?
Not necessarily. The calculator shows how many orders you would need to keep today's total profit; it does not predict whether the discount will produce them. Demand depends on your product, your market and your customers, and no figure here assumes any increase.
Why can't it recommend more orders when profit per order is zero or negative?
If each discounted order earns nothing, no number of orders adds up to the baseline. If each order loses money, selling more makes the total worse. In both cases the calculator explains this instead of showing an order count.
What if my profit is already zero or negative before the discount?
There is no positive profit to maintain, so keeping the same total profit is not a meaningful goal. The calculator says so. Fix the price or the costs first, using the E-commerce Profit Calculator or the Selling Price Calculator.
Why do fees change when I discount?
Percentage fees are charged on the amount the fee applies to, which falls with the price. So fees shrink a little after a discount, which softens the profit loss. Fixed fees, shipping and advertising per order do not shrink.
Is the order volume I see my real volume?
No. 100 is only an example so the page shows a result straight away. Enter the number of orders you sell at the original price in a period you choose; the required orders are for that same period.
Are taxes included?
No. All amounts exclude sales tax, VAT and GST, and no exchange rates or income tax are applied. Choosing a currency only changes the symbol.