How to Calculate Stacked Discounts & Protect Margins
During massive promotional events like Black Friday or Cyber Monday (BFCM), e-commerce brands often deploy aggressive discounting strategies to capture market share. However, offering a sitewide sale combined with an influencer coupon code can rapidly decimate your profit margins if not calculated correctly.
The Math Behind Sequential Discounts
A common misconception is that stacked percentages are additive. If you offer a 20% sitewide sale and allow a customer to use an extra 10% off coupon code at checkout, they are not getting 30% off.
Sequential math means the second discount applies to the already reduced subtotal. For a $100 product, a 20% discount brings the price to $80. Taking an extra 10% off the $80 brings the final price to $72 (a total savings of 28%, not 30%).
Why Sellers Must Track Impact Margins
Revenue is a vanity metric; net profit is sanity. If a product costs $40 to manufacture and your regular selling price is $100, your baseline gross margin is 60%. However, under the 20% + 10% stacked promotion example above, your selling price drops to $72, shrinking your gross profit down to $32 and your margin to just 44%.
If you fail to factor in dynamic variable costs like Customer Acquisition Cost (CAC) and shipping fulfillment when running deep discounts, you risk scaling your business straight into bankruptcy.
Use our "Advanced Metrics" section in the calculator above to instantly verify that your promotional pricing remains cash-flow positive.