Is your discount actually profitable? Work it out before the sale

A discount looks simple from a customer's side: 20% off means they pay 80% of the original price. From the seller's side, most product costs do not automatically fall by 20%. That is why a promotion can reduce profit far more sharply than it reduces revenue.

First, calculate the new selling price

For an item originally priced at ₹1,000, a 25% discount makes the customer price ₹750. Before celebrating the order volume, subtract the full costs attached to each order.

Example: what happens to the margin?

Assume the complete per-order cost is ₹650 and stays constant during the promotion. This is an example, not a marketplace rate.

Revenue falls by 25%, but profit per order falls from ₹350 to ₹100—a reduction of about 71%. Extra volume would need to make up the difference, and there may be extra advertising or fulfillment work as well.

Find your break-even discount

If costs are fixed per order, the largest discount before profit reaches zero is (original price − total cost) ÷ original price × 100. In the example that is 35%. Do not use 35% as a safe promotion target: it leaves nothing for unexpected costs or business overhead. Percentage-based platform fees can change with the discounted price, so recalculate rather than assuming every cost is fixed.

Four questions before announcing a sale

1. Does the discounted price still cover product, packaging, shipping and fees?
2. Will advertising or return costs rise during the promotion?
3. What is the goal—clearing inventory, attracting new buyers or increasing repeat orders?
4. How will you measure actual profit after the promotion ends?

Try the discount calculator for an immediate sale-price estimate, then the profit calculator for a fuller cost breakdown.