Discount dependency calculator
Adjust the sliders to reflect your brand. No sign-up or shared data required. Just maths.
What trimming the promotional calendar saves
Same discount depth, same margin, just fewer orders sold on promotion. You currently sell 45% of orders on promotion.
Book a demo to find the — sitting in your repeat rate.
We’ll show you gross margin by customer rather than by product, which cohorts have never bought at full price, and which ones you’ve been discounting to for no reason. Using your data, not a sample.
Discounting costs margin
Every retailer knows discounting is expensive. Very few know what it costs them, because the number never appears anywhere in a normal reporting stack. Revenue is reported after discount. Gross margin is reported as a blended percentage. The promotional calendar is planned by trading, and the margin consequence lands in a finance review months later with no line item attached to it.Repeat purchase rate is the share of customers who come back and buy again. It is the least glamorous metric in retail and the one that moves the profit line hardest, because every point of it is revenue you did not have to pay to acquire twice.
The arithmetic is worth doing slowly, because it is more brutal than it first appears. Take a product with a 45% gross margin. Sell it at 30% off. The discount does not take 30% of your profit. It takes 30 percentage points off a price that only carried 45 points of margin in the first place. You keep roughly a third of the profit you would have made. Do that on 45% of your orders and you have handed back something close to 43% of your entire gross profit for the year.
There is a second effect that makes the reported figures flattering. Because revenue is recorded net of discount, the giveaway looks smaller than it is. To see the real number you have to gross back up to the ticket value you chose not to charge. That is what the formula above does, and it is why the figure on this page is usually larger than the one a retailer carries in their head.
Depth versus frequency
Of the two levers, frequency is usually the cheaper one to pull. Cutting depth by five points is a merchandising and pricing negotiation that touches every supplier relationship. Cutting the share of orders that go out on promotion is a targeting decision, and it is the one most retailers have no way of making, because they cannot tell which customers needed the discount and which ones were going to buy regardless.
That is the real problem underneath discount dependency. A blanket 20% off code is a margin transfer to everybody, including the customers who were already loyal, already full-price, already coming back. Those customers are the most valuable in the base and they are the cheapest to discount to, so they get discounted to constantly.
What changes it
Knowing full-price behaviour at a customer level. Which customers have never bought at full price and which have never needed a code. Which cohorts respond to a smaller discount, and which respond to none. Which products pull people in and which are simply being given away. None of that is visible in a blended margin report, and all of it is visible in customer-level margin data. That is the difference between managing a promotional calendar and just running one.
FAQs
How do you calculate the cost of discounting?
Revenue already reflects the discount, so work back to ticket value first: divide revenue by one minus promotional share times depth. The discount given away is that ticket value times promotional share times depth. Against the gross profit you keep, it shows what share of margin the promotional calendar consumes.
What share of gross profit does discounting usually consume?
It depends on promotional share, depth and margin, and it compounds fast. 45% of orders at 30% off on a 45% margin hands back about 43% of gross profit. The figure is independent of revenue, so it is structural rather than a function of size.
Why does discount depth cost more than it looks?
Because it comes out of margin, not revenue. A 30% discount on a 45% margin product removes about two thirds of the profit on that sale. And because revenue is recorded after discount, the true giveaway is larger than the headline percentage suggests.
The maths, and where the numbers come from
This page is unusual among our calculators: the headline number needs no benchmark at all, and the one figure that does need an assumption is a slider you control.
Revenue is recorded after the discount is applied, so the giveaway has to be grossed back up to ticket value first. That is the 1 − promotional share × depth term. Note that revenue cancels out of the headline ratio entirely: the share of gross profit you hand back is a structural fact about how you trade, not a function of your size. A $60M brand and a $600M brand trading the same way get the same percentage.
The scenario cards show discount you would no longer give away, not gross profit you would recover. Some of the customers taken off promotion would not buy at full price, and the calculator doesn’t assume they all would.
Sources
| Figure | Source | Date | Sample |
|---|---|---|---|
| Share of orders on promotion (starting estimate) | Assumption. No credible published benchmark found for promotional share by retail category | Not applicable | Not applicable |
| Average discount depth (starting estimate) | Assumption. As above | Not applicable | Not applicable |
| Gross margin (starting estimate) | Assumption. Anchored on CSIMarket industry margins (Retail Apparel 34.62%, Apparel/Footwear/Accessories 50.12%) | Q1 2026, trailing twelve months | Listed companies, not a mid-market sample |
| Share who’d have paid full price | Assumption, and yours to set. Promotional incrementality is not credibly benchmarked across retail | Not applicable | Not applicable |
What we’re assuming
We could not source promotional depth by category, so we don’t claim to know it. Figures circulating online as McKinsey and Business of Fashion’s State of Fashion 2026, claiming markdowns consume 20–50% of net sales, trace back to a markdown-software vendor’s blog rather than the report’s own text. We could not verify them at source, so we have not used them. Every promotional starting point on this page is our estimate, labelled as one.
This page shows no category benchmark comparison, unlike the rest of our calculators, for exactly that reason. The split bar shows your own numbers against each other, not against an invented median.
Promotional incrementality is a slider, not a claim. The 50% default is a placeholder. Set it to zero and the figure disappears. That is deliberate. Measuring it properly means looking at each customer’s own history of full-price versus promotional buying, which is a data exercise rather than a benchmark.
Promotional and full-price orders are treated as the same size at ticket price. If your promotional baskets are bigger or smaller than full-price ones, use the share of revenue at ticket value rather than the share of orders.
Discount depth is treated as uniform. Real distributions are skewed by end-of-season clearance, so a single average understates the tail.
This is the cost side only. Discounting genuinely creates volume, and this calculator does not net that off. It answers “what does the promotional calendar cost in margin”, not “should we stop discounting”. Those are different questions.