In plain words
A fixed-amount discount takes a set sum off the price or the order: $10 off, $5 off your first order. Customers often respond to it more than to the equivalent percentage, because the saving is concrete.
Its cost in margin is nearly the same on every order, whatever the order's size. That makes it cheap on large orders and severe on small ones. The same $10 can be a tenth of one order's margin and most of another's.
Formula
- Margin after discount = margin before − discount × (1 − costs charged as a share of revenue)
Worked example
$10.00 off the single $40.00 bag takes its margin from $15.36 to $6.15. The same $10.00 off the three-bag order takes it from $48.06 to $38.85.
Both orders lose the same $9.21. The single bag then needs 149.8% more buyers to break even, and the bundle 23.7%.
The example order
A $40.00 bag of coffee, shipped free, every cost counted
2 declared kinds cost nothing on this option
| Step | Grain | Amount |
|---|---|---|
| Revenue | – | $40.00 |
| Cost of goods | per unit | −$12.00 |
| Pick and pack | per order | −$1.18 |
| Packaging | per parcel | −$0.50 |
| Shipping label | per parcel | −$7.50 |
| Card fee per order | per order | −$0.30 |
| Refunds | percent | −$2.00 |
| Card processing | percent | −$1.16 |
| Contribution margin | – | $15.36 |
| 2 kinds costing nothing | – | $0.00 |
Computed by the margin engine in Offer Suite's own code, in whole cents, from a $40.00 bag of coffee with a $12.00 unit cost.
A fixed amount is not a percentage in disguise
$10 off is 25% of a $40 order and under 10% of a $102 one. A percentage scales with the order and a fixed amount does not. If small orders can use the code, price the offer on them.
Using it
Pair a fixed-amount discount with a minimum order value, set where the order can afford it. Without a minimum, the smallest orders take the largest relative discount, and those are the orders with the least margin to give.