A price cut does not reduce every cost
Discounts lower revenue immediately, while product cost and fulfillment often stay the same. Percentage fees may decline with the price, but fixed charges usually do not decline within a simple per-order model. As a result, a 10% price discount can reduce per-order contribution by much more than 10%.
Before launching an offer, calculate the ordinary order and the discounted order with the same cost assumptions. Keep shipping treatment consistent. A free-shipping promotion should include the delivery amount you no longer collect, as well as any change in the item price.
Calculate the contribution lost
Assume a $50 item, $20 product cost, $5 fulfillment, and an illustrative fee of 10% plus $0.50. With no advertising included, ordinary contribution is $50 − $20 − $5 − $5.50 = $19.50. A 10% discount reduces the sale price to $45 and fees to $5.00, leaving $15.00.
The $5 price cut lowers contribution by $4.50, or about 23.1%. The percentage fee falls by $0.50, which offsets only a small part of the discount. If the promotion also increases advertising or handling costs, the contribution decline will be larger.
Work out the additional volume required
To preserve the same total contribution, divide ordinary contribution by discounted contribution. Here, $19.50 ÷ $15.00 = 1.30. You need 30% more orders to match the previous contribution, assuming the same costs, product mix and return behavior.
For example, 100 ordinary orders contribute $1,950. At the discounted contribution of $15 each, 130 orders are required to reach the same total. That also means packing 30 additional orders and acquiring or producing 30 additional units. Equal contribution does not necessarily mean equal workload or equal cash requirements.
Set a decision rule before the promotion
Decide what success means: total contribution, clearance of aging stock, repeat purchases or another measurable objective. If discounted contribution is zero or negative, selling more cannot recover the normal contribution under this simple model. A different strategic justification would need its own evidence.
Use the e-commerce calculator twice and save both breakdowns. Include the actual advertising allocation and delivery costs for the offer. Afterward, compare incremental results with a suitable baseline rather than attributing all sales during the promotion to the discount. The arithmetic identifies the volume hurdle; it does not predict whether customers will supply that extra demand.