Running discounts is an easy way to increase your revenue, especially during new launches or seasonal promotions.
However, speaking from experience, I have seen several online shops overdo it and fail miserably.
- Some randomly offer discounts without a proper strategy.
- There are few who fail to notice that they are slashing prices well below the opportune profit margin.
- An then there are people who even ends up cutting down prices so low, that it becomes less than the actual cost, leading to a loss! 🤦
Sure, discounts will get you more number of orders than usual.
But, even before you launch a campaign, it is important to estimate if you will make a profit, or if you are setting yourself up for a loss…
That’s right. You need to know this even before you launch your discount strategy. And today, I will share my knowledge on how you can actually develop a profit-first plan when offering discounts.
In this guide, you will learn the right steps to take when planning to offer a discount, along with a few proven strategies that will get you more profits than the generic approach.
So let’s get started,
What is a Profitable eCommerce Discount Strategy?
A discount strategy isn’t just about cutting prices. You need to plan it well so that you can hit higher numbers on revenue and orders without cutting too much on profits.
It will be more profitable if you focus on value, and not just discount percentages. Meaning, you need to offer them when people find it most valuable and exciting, rather than randomly deciding a surprise discount out of the blue.
For example, you could use one of the following:
- Value-based discounting: You may offer discount based on what the customer values most, not just your product price and profit margin.
- Behavioral triggers: Offer discounts when a customer is most likely to buy (like cart abandonment or post-purchase).
- Funnel-based offers: Add discounts are part of a bigger marketing funnel, such as upsells, downsells, and bundles, to increase overall order value.
There are more, but these three are the most potential ones to deliver high results.
If you notice carefully, none of them is about deciding the percentage. Rather they are about when you are offering it.
Added to this, is the amount you should cut down from the price, which should never be decided out of whim. (We’ll talk about this is detail in a bit.)
Eventually, a discount strategy should be part of a profitable buying journey and not just a random offering with no goals.
Why Many eCommerce Discount Strategies Fail
While not expressed publicly, many promotional discount strategies actually fail on a regular basis. And following are the main reasons why:
- Random discounts: Running a sale without a clear goal usually means profits drop. It also teaches your customers to expect discount codes, not value.
- Sitewide sales: Discounting everything may boost orders for a short time, but it makes your products feel less special and lowers customer perception.
- Race to the bottom: Lowering prices to compete keeps pushing your margins down. Customers start choosing based on price, not your brand value.
- Deep discounts: Big price cuts may increase orders, but they often destroy profit. You end up working harder for less money and harming your bottom line.
- Brand damage: Constant sales make your store look like a bargain shop. That makes it harder to charge full price later and hurts customer relationships.
- Customer habits: Shoppers will wait for deals instead of buying when they need something. That means fewer full-price purchases and weaker loyalty discounts.
Understand Your Numbers before Offering Any Discount
Before you start offering discounts, you need to understand your numbers. Otherwise, you’re just guessing.
In the next section, I’m going to walk you through an eCommerce discount strategy that protects your profit.
1. Know Your Margins (This is Non-Negotiable)
Before you offer any discount, you need to know how much you actually earn from each sale.
That starts with understanding the difference between gross margin and contribution margin, which is essential for any Discount Strategy.
- Gross margin: This is the profit left after subtracting the cost of goods sold (COGS). It tells you how much money remains to cover everything else.
- Contribution margin: It goes a step further and subtracts variable costs (like payment fees, shipping, and packaging) from the gross profit. This is the real amount that contributes to your profit.
Why this matters:
If you only look at gross margin, a promotional discount strategy may look safe, but once variable costs are included, the sale could actually be losing money.
Simple margin calculation example:
- Product price: $50
- Cost of goods sold: $20
- Payment fees + shipping: $8
Gross margin = $50 − $20 = $30 Contribution margin = $30 − $8 = $22
If you offer a 20% discount ($10 off), your contribution margin drops to $12. That’s still profitable, but a 40% discount would wipe out your profit entirely.
2. Identify Products That Can Safely Be Discounted
Not every product should be discounted, and some are safer than others. Here are the best practices:
- High-margin products: Items with high profit margins can handle discounts without hurting your bottom line.
- Add-ons: Accessories or related products often have low costs and high perceived value; you can keep them in your discount strategy.
- Digital vs physical products: Digital products usually have very low variable costs, so you can use discounts more aggressively. Physical products have shipping and handling costs that can eat up your margin fast.
Warning:
Don’t discount your hero products blindly (your best-sellers or signature items).
If these are discounted too often, you’ll train your customers to wait for sales and create a discount dilemma, where your full-price sales start to disappear.
Types of eCommerce Discount Strategies That Don’t Kill Profit
Now you will learn some proven eCommerce discount types that boost your sales without destroying your profit margins.
1. Cart-Based Discounts (Increase AOV)
Cart-based discounts offer a deal only after customers reach a minimum cart value, like “Spend $100, get 10% off.”
It’s a simple way to inspire shoppers to add more items before they checkout.
For example, if a customer has $85 worth of items, they might add a $20 product to get the discount. This turns a hesitant buyer into a higher-value order.
This helps because you increase your average order value without discounting every product. You will make more money from the same customer while keeping margins safer.
You can watch this video for your cart discount strategy:
2. Order Bump Discounts at Checkout
Order bump discounts are small offers shown right at checkout, usually for add-ons or accessories. They work because the buyer is already in the buying mindset and just needs a small reason to add more.
For example, you can offer “Add this for $5 off” on a related product at checkout. Many customers accept because it feels like a smart deal without extra effort.
This helps increase revenue instantly, without lowering the main product price. It also improves customer experience by offering something relevant at the right moment.
3. Bundle & Volume Discount Strategy
Bundle discounts combine multiple products into one offer, making the overall value feel higher. Volume discounts reward customers for buying more units, like “Buy 3, get 20% off.”
For example, a bundle of three items at a small discount often sells better than one item on a big sale. Customers feel they are getting more for less, and you move more inventory.
This helps protect margins because you’re selling more units without deep price cuts. It also increases total revenue and makes the offer feel premium rather than cheap.
Watch this video to implement a compact bundle discount as an upsell:
4. First-Time Buyer Discounts (Used Carefully)
First-time buyer discounts give a small deal to new customers to encourage their first purchase. They work best when the discount is tied to a specific goal, like trying a new product.
For example, offering 10% off on a new product can turn a visitor into a buyer. It’s a good way to get new customers to trust your brand and make that first purchase.
This helps you acquire customers without relying on constant sales. But overusing it can train shoppers to wait for discounts, hurting long-term profits.
Promotional Discount Strategy vs Long-Term Offer Strategy
Now I will show you a quick comparison table of promotional discount strategy vs long-term offer strategy, so you can see which one fits your store better.
| Promotional Discount Strategy | Long-Term Offer Strategy |
|---|---|
| Short-term sales like Black Friday are used to get a quick spike in orders | Evergreen offers like free shipping, which keeps customers buying without waiting |
| Creates urgency so people buy now, even if they weren’t planning to | Encourages steady purchases because the offer is always available |
| Often seasonal or limited-time, so you must promote it heavily | Works without heavy promotion once set up |
| Can train customers to wait for the next sale | Builds trust because customers don’t feel “manipulated” |
| Best for clearing stock or boosting revenue quickly | Best for long-term growth and repeat buyers |
| Example: “Summer Sale – 20% off” | Example: “Buy 2 get 1 free (always)” |
| Requires constant planning and deadlines | Runs quietly in the background |
| Can hurt margins if used too often | Protects margins by focusing on value, not deep discounts |
| Works when you need fast results | Works when you want sustainable profit |
For a promotional discount strategy, you can use limited time offer in your WooCommerce funnel. Let’s see how it works:
How to Apply a Discount Strategy in WooCommerce
Discounts don’t increase revenue by default – placement, visibility, and timing determine whether a discount boosts your profit or quietly destroys margin.
In WooCommerce, where you position your discount matters more than its size. Let’s break this down practically.
1. Discount Placement Matters More Than Discount Size
Most store owners focus on the percentage (10%, 20%, 30%). But psychologically, where the discount appears in the buying journey has a much bigger impact.
Here’s how each placement performs:
Product Page Discounts
Product page discounts are price reductions shown directly on your product page, like “Was $99 – Now $79.” Every visitor sees the lower price before adding the item to their cart.
For example, if you sell wireless headphones and drop the price from $120 to $89 on the product page, everyone browsing sees the discount right away.
The main benefit is higher conversions because the deal is clear and immediate. It helps customers decide faster since they feel they’re getting a good price upfront.
Pros
- Increases immediate conversion rate
- Easy to implement
- Works well for seasonal promotions
Cons
- Trains customers to wait for sales
- Devalues perceived brand quality
- Reduces margin on every visitor (even those who would have paid full price)
2. Use Funnels to Control Discount Exposure
Funnels let you choose who sees a discount and when. Instead of lowering the price for everyone, you show the offer only to buyers at checkout or after they buy.
For example, a customer buys a laptop at full price, and after completing the order, they see a limited-time 20% discount on a mouse. Only paying customers see this offer, not every website visitor.
This approach supports a smarter ecommerce discount strategy and helps maintain your brand value, and increases average order value without training customers to expect constant sales.
Pros
- Controls who sees the discount
- Protects brand value and price perception
- Increases average order value
- Makes discounts feel exclusive
Cons
- Requires funnel or checkout setup
- Needs clear planning and strategy
- More complex than simple product page discounts
Learn more – How to Add an Exclusive Discount to Your Offer Products
Psychological Triggers That Make Discounts More Profitable
1. Urgency without Desperation
Urgency helps people decide faster, but it should feel honest and fair. Use real limits like a checkout-only offer or a true time-limited discount.
For example, you can offer a 10% discount that ends at midnight or a deal that only appears at checkout. These work well during seasonal discounts because the deadline is real.
You can also create urgency for existing customers with a short-term offer after purchase or during a loyalty event. This rewards repeat buyers without lowering your public price.
Avoid fake countdowns or false “limited stock” claims because they damage trust. A strong discount strategy in marketing keeps urgency transparent and based on real conditions.
2. Relevance Beats Bigger Discounts
Relevant offers convert better than bigger discounts because they match what the customer already wants. When an offer fits their needs, it feels helpful instead of just cheap.
For example, if someone buys running shoes, offering a discounted pair of socks or a shoe cleaner is more effective than a large discount on the shoes. Product pairing works because it adds value and feels natural.
Leading retailers use these discount tactics to boost sales without cutting prices, and the ultimate goal is to make discounts feel like upgrades, not desperation.
How Often Should You Discount? (Timing Strategy)
Timing is important because a discount given at the wrong moment can reduce profit instead of increasing sales.
So let’s see how you can set timing for your discount strategies:
- Discount frequency risks: Discounting too often trains customers to wait for sales and lowers your profit. Constant promotions also reduce your brand’s perceived value.
- Safe discount cadence model: Limit major discounts to 3–4 times per year, tied to real events like holidays or launches. Use smaller, targeted offers in between, like checkout-only deals or loyalty rewards.
- Seasonality vs evergreen discounts: Use seasonal discounts for big, predictable events (e.g., holidays). Keep evergreen discounts rare and small, so your brand stays premium, and customers don’t expect constant deals.
How to Measure If Your Discount Strategy Is Actually Working
Discounts can increase sales, but that doesn’t mean your strategy is actually profitable.
To know if your ecommerce discount strategy is working, you need to track the right metrics that show real business impact – not just revenue.
The metrics below help you evaluate your strategy and make smarter decisions about discount size, timing, and placement.
- AOV (Average Order Value): Shows whether discounts are increasing cart size or just lowering profit per sale. If AOV drops after a discount, your ecommerce discount strategy may be hurting revenue.
- Revenue per visitor: Measures how much value each visitor brings, not just the number of orders. Higher revenue per visitor means your discounts are truly improving performance.
- Conversion rate: Tracks how well your offer turns visitors into buyers. If conversion rises but profit falls, your discount may be too deep or too frequent.
- Profit per order: The real test of sustainability, showing whether you’re making money after discounts. If this drops, you need to adjust the discount size or placement.
- Repeat purchase rate: Shows whether discounts are building loyalty or just one-time bargains. If repeat purchases fall, your discounts may be training customers to only buy on sale.
Conclusion
Discounts can boost sales, but only when they are used strategically and measured correctly. A good ecommerce discount strategy is about profit and value, not just higher order numbers.
Track metrics like AOV, revenue per visitor, and profit per order to see the real impact of your offers. These numbers show whether your discounts are helping or hurting your business.
Focus on relevance and timing instead of deep price cuts. Targeted offers, like checkout-only deals or product pairings, work better than constant sitewide discounts.
As a final tip, add an order bump at checkout to increase AOV without lowering your main product price. This is one of the simplest and most profitable ways to use discounts effectively.
** FAQs **
Why don’t my discounts increase profit?
If you discount too often or too early, customers learn to wait for sales. That lowers your profit even when orders increase. Try checkout-only offers or order bumps instead of lowering prices upfront.
Why did my sales rise but profit drop?
Deep or broad discounts can shrink your margins once variable costs are included. You may be selling more, but earning less per order. Check AOV and profit per order, then switch to value-based offers.
How do I stop customers from asking for discounts?
If discounts are always visible, people expect them every time. That trains your audience to never buy at full price. Keep prices stable and offer controlled discounts for the first order or at checkout.
Should I run sitewide sales to compete?
Sitewide sales can hurt your brand and margins over time. You can get quick attention, but your pricing becomes weak. Use targeted offers and upsells as part of a smart ecommerce business strategy.
How do I know if my discount strategy is working?
Track AOV, revenue per visitor, conversion rate, and profit per order. These show whether your offers are improving value or just driving low-margin sales. If they don’t improve, your discount approach needs adjustment.
