On large screens, the form uses three columns; it stacks to two, then one on mobile.
| Scenario | Subtotal | Discount | Tax rate | Order total | Net profit | Profit change |
|---|---|---|---|---|---|---|
| Baseline (no discount) | 120.00 | 0.00 | 8.50% | 138.84 | 45.16 | 0.00 |
| 15% promotion | 120.00 | 18.00 | 8.50% | 119.37 | 25.47 | -19.69 |
| $10 coupon | 120.00 | 10.00 | 8.50% | 129.06 | 34.17 | -10.99 |
- Discount amount = subtotal × discount% or fixed value (capped at subtotal)
- Discounted subtotal = subtotal − discount amount
- Taxable base = discounted subtotal + shipping + handling
- Tax = taxable base × (tax rate ÷ 100)
- Order total = discounted subtotal + shipping + handling + tax
- Payment fee = order total × (fee rate ÷ 100) + fixed fee
- COGS = subtotal × (1 − gross margin ÷ 100)
- Returns cost = discounted subtotal × (returns rate ÷ 100)
- Net profit = (discounted subtotal − COGS) − fees − returns − promo cost
- Breakeven lift compares baseline profit vs discounted profit per order
- Enter your typical cart subtotal and shipping/handling amounts.
- Choose percentage or fixed discount, then add the discount value.
- Set tax rate, payment fees, gross margin, and returns assumptions.
- Press Calculate impact to see totals and profit change.
- Use break-even lift to estimate required extra orders or conversion.
- Download CSV or PDF to share results with your team.
Revenue and discount mechanics
Discounts change net merchandise revenue first. A 15% code on a 120 cart removes 18 instantly, before tax. Fixed coupons behave differently on small baskets, so track effective rate. If a 10 coupon is applied, the effective rate is 8.33% at 120, but 20% at 50. This calculator caps the discount at the subtotal to avoid negative line items.
Tax and fee sensitivity
Tax is computed on discounted merchandise plus shipping and handling, then the gateway fee is applied on the order total. When tax is 8.5% and fees are 2.9% plus 0.30, a lower order total reduces fee dollars but not the fixed component. On small orders, fixed fees can exceed 1% of revenue, narrowing the room for promotions.
Margin and COGS realism
COGS is estimated from gross margin using COGS = subtotal × (1 − margin). If gross margin is 45% on 120, COGS is 66 and baseline gross profit is 54. Because COGS does not fall with a discount, every discount dollar typically reduces gross profit dollar for dollar. Use blended margin if your cart mixes high and low margin items.
Returns and promo overhead
Returns are modeled as a percentage of discounted merchandise revenue. A 3% returns rate on a 102 discounted subtotal creates 3.06 of expected cost. Add promo tooling cost for affiliate commissions, coupon platform charges, or incremental packaging. These overheads help explain why two promotions with the same discount can have very different profit outcomes.
Break-even lift planning
Break-even compares baseline net profit per order to discounted net profit per order. If discounted net profit stays positive, the calculator shows the orders multiple and lift required to match baseline profit. For example, if baseline profit is 45.16 and discounted profit is 25.47, you need about 1.77× orders, or roughly 77% lift. If discounted profit is zero or negative, break-even is not feasible. Use the rounding control to match your reporting precision and ensure consistent comparisons across scenarios. Run multiple discount values and watch profit change, fee dollars, and effective discount rate together. Teams often pair this output with conversion forecasts to decide which offer should ship for each channel.
1) Does the calculator reduce COGS when I apply a discount?
No. It assumes product cost stays the same and only revenue changes. This reflects most coupon scenarios, where supplier cost is unchanged and margin compresses.
2) What if my store does not tax shipping?
Adjust by setting shipping and handling to zero for the taxable base, or interpret tax as merchandise-only. If you need exact jurisdiction rules, mirror your platform’s tax settings in the inputs.
3) Why include both a percent fee and a fixed fee?
Most processors charge a percentage plus a flat amount per transaction. The fixed portion matters on low-value orders and can make small discounts unprofitable faster than expected.
4) How is returns cost estimated?
It uses returns rate × discounted merchandise revenue. This is a planning proxy for refunds, reverse logistics, and resale loss. Increase the rate for categories with high size or fit variance.
5) What does “break-even lift” mean in practice?
It is the extra orders needed to earn the same total profit as baseline, assuming per-order profit remains constant. Use it with conversion forecasts to judge whether the lift is realistic.
6) Can I use this for AOV-building offers like free shipping?
Yes. Model free shipping by reducing the shipping input and adding the shipping subsidy into promo cost. Then compare profit change and break-even lift against your expected demand uplift.