Discount Impact
Evaluate how price promotions affect revenue by modeling discount percentage and conversion uplift. Provide base price and conversion to compare new price, expected conversion, and revenue change per 1,000 visitors.
Notes
Conversion lift varies by audience and offer. Use experiments to calibrate uplift inputs.
What is discount impact?
Discount impact models how price promotions affect conversion and revenue. It balances lower price against higher conversion to determine net effect.
How to use this calculator
Provide base price, baseline conversion, the discount percentage, and expected conversion uplift. The tool returns new price, new conversion, and revenue per 1,000 visitors to compare scenarios.
Why promotions matter
Well‑timed offers unlock hesitant buyers without permanently eroding perceived value. Use sparingly and test for seasonality and audience fit.
Example
A 20% discount on $30 reduces price to $24. If conversion rises from 4% to 5% (25% uplift), revenue per 1,000 visitors moves from $1,200 to $1,200 — unchanged — showing the importance of measuring lift.
Assumptions & limitations
Uplift estimates are context‑dependent. Watch for fatigue, anchoring to sale prices, and cannibalization of full‑price purchases.
Formula
Baseline revenue per visitor is P × C, where P is price and C is conversion rate. After a discount d and conversion uplift u, revenue becomes P × (1 − d) × C × (1 + u).
Break‑even uplift
To break even, set new revenue ≥ baseline: (1 − d)(1 + u) ≥ 1 ⇒ 1 + u ≥ 1 ÷ (1 − d) ⇒ u ≥ d ÷ (1 − d). For a 20% discount, the required uplift is 25%.
Margin considerations
Discounts reduce unit margin. If variable cost is meaningful, pair this analysis with contribution margin to ensure promotions don’t drive high‑volume, low‑profit outcomes.
Benchmarks & scenarios
Small time‑boxed discounts (5–15%) often yield modest uplift in low‑ticket B2C. In B2B SaaS, discounts are typically used for annual prepay or multi‑seat deals rather than public promos; measure incrementality and guard against price anchoring.
Common pitfalls
Overusing discounts, stacking coupons, confusing terms (net vs. gross), and ignoring cannibalization from pulling forward demand can misstate true impact.
Step‑by‑step example
Baseline: P = $30, C = 4% ⇒ $1.20 per visitor. Promo: d = 20% ⇒ price $24; uplift u = 25% ⇒ conversion 5%. New revenue = $24 × 5% = $1.20. Break‑even condition holds (u = 25% = d ÷ (1 − d)).
Best practices
Use discount ladders for targeted segments, time‑box promotions, set floor prices, and monitor net lift via A/B testing. Consider value‑based incentives (add‑ons, extended trials) to avoid brand erosion.