How many more orders does a 10% discount require to maintain contribution?

Discounts affect the contribution margin

A discount campaign may increase orders, release capital tied up in inventory or encourage trial. But if the goal is to maintain business performance, calculate contribution before choosing the incentive.

Per-order contribution here is net revenue minus variable costs, using the same scope before and after promotion. It is not net profit, since fixed costs remain. The example only illustrates order economics; it does not describe platform fee levels.

A 10% discount example requires 50% more orders

Assume realized selling price of VND 300,000, variable costs of VND 210,000 and contribution of VND 90,000 per order. With 100 orders, total contribution is VND 9 million.

A 10% discount reduces the price to VND 270,000. If variable costs remain VND 210,000, contribution falls to VND 60,000. Maintaining VND 9 million requires 150 orders, or 50% more sales, despite a price reduction of only 10%.

A formula for your promotion

Orders needed after the offer = orders before the offer × contribution per order before the offer / contribution per order after the offer. Use only when the denominator is positive and comparison assumptions are appropriate.

If a fee varies with selling price, recalculate it at the new price. Gifts, higher shipping charges, shift staff or additional communication spending must be included at the correct cost level. Do not hold costs constant just to simplify the formula.

Reaching the order count does not guarantee reaching the goal

Existing customers may move purchases planned at full price into the discount period. Some sale orders are therefore not incremental. The campaign may also pull next month’s demand into this month.

Compare with a period with similar characteristics, monitor the time after the sale and separate new from existing customers. For seasonal products, record weather, holiday schedules or supply conditions to avoid attributing every change to the offer.

Three options before discounting every product

Try an offer on one product group rather than the full range, set a suitable basket-value condition or create a bundle that fully addresses one need. Each option still requires recalculating contribution.

For clearance goods, the goal may be cash recovery and lower holding costs rather than preserving margins. Record that objective so the team does not use clearance results as a benchmark for core products.

Check delivery capacity

In the 150-order example, packing work increases by 50%. If overload causes late delivery, wrong items or returns, actual contribution will fall below the original calculation.

Before starting, set limits for saleable inventory, daily handling capacity and stop conditions. After the promotion, use completed orders and all related costs to decide whether to repeat it.

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