- Planning discounts for Black Friday or another campaign
- Want to know how many more orders a discount requires
- Have sold more during a discount, but haven't earned more
- Want a formula and a table you can use right away
When you lower the price, you don't lower what the item costs you. Product costs, shipping, and payment fees remain the same as before. The entire discount therefore comes out of your contribution margin—that is, what remains of an order after variable costs have been paid.
An example with a hypothetical product: The selling price is 400 DKK excl. VAT, and the variable costs are 200 DKK. Your contribution margin is 200 DKK per order, which is a 50% contribution margin ratio.
If you offer a 20% discount, the price drops to 320 DKK, but the costs are still 200 DKK. The contribution margin falls to 120 DKK. The price dropped by 20%, but your contribution margin fell by 40%. To earn the same 20,000 DKK that 100 orders provided before, you now need to sell 167 orders. That is 67% more.
The customers who would have bought anyway
The calculation has a hidden component. A discount applies to everyone, including those who would have paid full price. Of the 100 orders in the example, 100 customers now pay 80 DKK less each, resulting in 8,000 DKK in lost contribution margin. The additional orders must make up for that 8,000 DKK, and each one provides 120 DKK. Therefore, 67 extra orders are required.
This is why a large increase in sales is not necessarily a good sign. Always ask yourself if the extra volume covers what you gave away to everyone else.
Additional orders (in percent) = discount ÷ (contribution margin ratio − discount)
The contribution margin ratio is the contribution margin as a percentage of the selling price excluding VAT. Use all figures as proportions of the original price.
With a 50% contribution margin ratio and a 20% discount: 0.20 ÷ (0.50 − 0.20) = 0.67. This means 67% more orders.
If the discount is equal to your contribution margin ratio, the contribution margin is zero. In that case, no amount of volume can cover the discount, because each extra order earns 0 DKK.
Use the table as a quick discount calculator. The figures show how many more orders a discount requires to keep your total contribution margin in currency unchanged.
Contribution margin ratio 30%
- 10% discount: 50% more orders
- 20% discount: 200% more orders
- 30% discount: no amount covers it
Contribution margin ratio 40%
- 10% discount: 33% more orders
- 20% discount: 100% more orders
- 30% discount: 300% more orders
Contribution margin ratio 50%
- 10% discount: 25% more orders
- 20% discount: 67% more orders
- 30% discount: 150% more orders
Contribution margin 60%
- 10% discount: 20% more orders
- 20% discount: 50% more orders
- 30% discount: 100% more orders
The lower the contribution margin, the faster the requirement spirals out of control.
The table is only as good as the contribution margin you input. Find the contribution margin per order like this:
- Sales price excl. VAT
- minus cost of goods
- minus the shipping you pay yourself
- minus payment fees
- minus returns, if they are a real expense
If you only calculate using the gross margin—that is, sales price minus cost of goods—the discount will look cheaper than it actually is.
Don't forget ad spend. We call what remains of the revenue after goods, shipping, fees, and ad spend have been paid for CM3. A positive number means an order is making money right now. If a new customer costs 150 DKK in ads and the contribution margin after the discount is 120 DKK, you lose 30 DKK on the first order. That is exactly the trap we explore in depth in Profit on first order.
Reverse the formula, and you get the deepest discount you can afford:
Maximum discount = contribution margin × expected increase ÷ (1 + expected increase)
With a 50% contribution margin and an expected increase of 30% more orders, the maximum discount becomes 0.50 × 0.30 ÷ 1.30, which is approximately 11.5%. Beyond that, you lose money on the offer, even if the increase hits as expected.
Use your own data from the last campaign as the expected increase, not a guess or an industry average.
Alternatives to the flat discount
A deep, flat discount isn't the only lever. Three alternatives:
- Bundles and volume discounts: The customer buys more, and your discount applies to a larger order. See how in Profit on first order.
- Offers for existing customers only: For example, early access, so the discount reaches those you already know, rather than those you still need to acquire.
- Concepts that don't rely on discounts: Creative concepts that generate demand through the message, so you aren't dependent on price.
- Find the contribution margin per product or category, excluding VAT.
- Look up your contribution margin and discount in the table, or use the formula.
- Compare this with the actual increase you achieved last time, based on your own figures.
- Check the contribution margin after discount against the cost of acquiring a new customer.
- Choose the depth, and consider a bundle or a tiered offer instead of a flat discount.
You can find more about preparation in our Black Friday 2026 guide.
DVISIONMEDIA's approach
We do not evaluate an offer based on revenue or ROAS alone. We evaluate it in terms of contribution margin in currency, because that is what pays the fixed costs, not percentages. Before a campaign, we calculate the break-even point for the discount, and we look at what the first order leaves behind in relation to the cost of a new customer. We calculate based on the store's own figures, not typical industry benchmarks. This is part of the approach we build into our strategy work through E-COM OS.
Also read why isolated figures can be misleading in MER vs. ROAS and What is a good ROAS.
1. How many more orders does a 20% discount require?
It depends on your contribution margin. With a 50% contribution margin, a 20% discount requires 67% more orders; at 40%, it requires 100% more. The formula is discount ÷ (contribution margin − discount).
2. What is the difference between contribution margin, contribution margin ratio, and markup?
Contribution margin is the selling price excluding VAT minus variable costs, in currency. The contribution margin ratio is the contribution margin as a percentage of the selling price. Markup percentage is typically calculated based on the cost price and is often confused with the contribution margin ratio.
3. How do I calculate the break-even point for a discount?
Find your contribution margin per order after all variable costs. Calculate the new contribution margin after the discount, and divide the old one by the new one. The result minus 1 is the increase in orders you need.
4. Can a discount be a bad idea, even if it generates more orders?
Yes. The extra orders must cover the lost contribution margin from all the customers who would have purchased anyway, and they must be able to cover the cost of acquiring a new customer.
5. What discount can I offer on Black Friday?
There is no single number. Use the formula for maximum discount with your own contribution margin and your expected increase from your last campaign.
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