How do I make sure a discount does not make me sell at a loss?

Example: a product costing 90 that sells for 120

At the normal price the profit is 30 and the margin is 25%. You are planning a month-end offer and cannot decide between 20% and 30%. Before announcing anything, run both through the calculator.

Notice that 25% is exactly your margin. That is not a coincidence: discount and margin are both measured against the selling price, so a discount equal to the margin wipes out the whole profit.

The steps

1. Enter the normal price and the sale rate in the Discount calculator and read the final price.
2. If a promo code applies on top of the sale, add it as a second discount so you see what the customer really pays.
3. Take the final price and your cost to the Profit margin calculator.
4. A negative profit means the offer sells at a loss. A positive one raises the next question: does it cover shipping and fees?

The hidden loss: two discounts stacked

Plenty of sellers check that the seasonal discount is safe, then allow an extra promo code without running it. 20% off followed by a 10% code is an equivalent discount of 28%, which is above the 25% margin in our example, so the safe offer turns into a loss. Always enter both discounts together.

What this check does not see

• The cost you enter should include everything you pay per unit, not only the supplier price.
• Payment gateway fees and marketplace commission are usually charged on the discounted price, so they shrink a little but never disappear.
• Free shipping attached to the offer is an extra cost to you. Add it to the cost before you judge.