Discount Rate (Sales Discount)
How much revenue you're giving away through coupon codes, flash sales, and promotions. Discounts move units, but they punch straight through your margin. A 20% off sale on a 30% margin product leaves you with 10% — barely profitable after fees.
Example
You run 20% off on 200 orders at $50 AOV. That's $2,000 in discounts. With a 30% margin, you'd need 133 additional orders just to earn back what the discount cost you. Did the promotion actually generate 133+ extra orders?
Why It Matters
Discounts feel like a growth lever, but they're a margin killer. A store running permanent 15% off promos with a 25% margin is left with 10% — barely enough to cover fees, let alone grow. If you don't track your effective discount rate, you don't know your real pricing.
Pro Tip
Before your next sale, calculate exactly how many extra orders the discount needs to generate just to break even. If you can't confidently hit that number, try a smaller discount or a free-shipping offer instead.
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