In plain words
Subscribe and save is a discount a customer gets for agreeing to recurring orders, typically 10 to 15% off every delivery. Many brands add a bigger discount or a gift to the first order to get the subscription started.
The offer has two prices and two margins. The first order carries the acquisition discount and any first-box extras. Each renewal carries the standing discount. Judging it on either alone is wrong: the first order understates it, and a renewal overstates it if subscribers leave early.
Formula
- First-order price = list price × (1 − first-order discount)
- Renewal price = list price × (1 − subscribe-and-save discount)
Worked example
20% off the first $40.00 bag, then 10% off every renewal: $32.00 and $36.00. The engine gives margins of $3.79 and $11.68.
The subscriber passes a one-time buyer's margin at order 3, if 85% of subscribers take each next order.
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 |
| cogs | per unit | −$12.00 |
| pick_pack | per order | −$1.18 |
| packaging | per parcel | −$0.50 |
| shipping | per parcel | −$7.50 |
| processing_fixed | per order | −$0.30 |
| refunds | percent | −$2.00 |
| processing | percent | −$1.16 |
| Gross 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.
Subscribe and save is not a discount on every order you'd have had anyway
If most subscribers would have reordered at full price, the standing discount is a cost with little gain. The comparison that matters is a subscriber's expected profit against the one-time buyer's, including how often one-time buyers come back.
Using it
Price the two discounts together, over the renewals you expect. A deeper first-order discount wins more subscribers and costs more per subscriber; a deeper renewal discount lowers every renewal's margin but may keep subscribers longer. The subscription calculator shows the combined effect at your retention. Remember the one-time buyer too: if a subscribe option draws buyers away from full-price one-time orders, the comparison is against what those buyers would have paid.