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Discount cost calculator: a discount for all or a prize game?

See how much margin a discount gives away, how many extra orders you need to break even, and how that compares with a game where some players win a discount.

General information, not legal advice. Prize games tied to a purchase are regulated differently from country to country. Check the rules in your country before you require a purchase to take part.

All numbers below are examples. Replace them with your own. They are not benchmarks, and the calculator does not predict how many people will buy or play.

Your shop

Use the same period for everything, for example one month.

Scenario A: a discount for everyone

Every order in the period gets the discount, as with a sitewide sale.

Scenario B: a prize game

Buyers play a game, such as a scratch card or a prize wheel, and some win a discount.

Discount prize 1
Discount prize 2
Discount prize 3

For example, one main prize. Enter 0 if all prizes are discounts.

Pre-filled with Scratcher Professional: €699 a month, excl. VAT.

The other buyers pay full price.

Side by side

A: discount for allB: prize game
Sales before discounts
Gross profit before discounts
Margin given away in discounts
Other prizes
Software
Total cost
Average discount per order
Gross profit after costs
Sales increase needed to break even
Extra orders needed to break even

Your numbers, step by step

    The formulas

    • Sales = orders × average order value.
    • Margin given away, scenario A = sales × discount.
    • Sales increase needed to break even = discount ÷ (margin − discount). With a 40% margin and a 10% discount: 10 ÷ (40 − 10) = 33.3%. Every order earns less, so you need more of them.
    • Average discount for a player, scenario B = the sum of each discount × the share of players who win it.
    • Average discount per order, scenario B = share of buyers who play × average discount for a player.
    • Total cost, scenario B = margin given away in discounts + other prizes + software.
    • Sales increase needed, scenario B = total cost ÷ (sales × (margin − average discount per order)). It is the same formula as for A, with the fixed costs added.
    • Extra orders = orders × sales increase needed, rounded up. The calculator assumes extra orders get the same average discount.

    This is arithmetic on your own numbers, not a forecast. It does not count the value of the email sign-ups and consents a game collects, or how a discount affects your brand. For campaign costs and revenue over time, use the campaign ROI calculator. To set the number of prizes, use the prize odds calculator.

    What a discount really costs

    A discount is paid out of your margin, not your sales. If your gross margin is 40% and you give 10% off, you keep 30% of each order instead of 40%. You lose a quarter of your profit per order, not a tenth.

    That is why a discount needs more orders to pay for itself. The classic formula is:

    Sales increase needed = discount ÷ (margin − discount)

    Margin10% off20% off30% off
    30%+50%+200%not possible
    40%+33%+100%+300%
    50%+25%+67%+150%
    60%+20%+50%+100%

    With a 40% margin, a 20% discount only breaks even if you sell twice as much. If the discount is as big as the margin, no number of extra orders can make it pay.

    Why compare with a prize game

    A discount for everyone also goes to people who would have bought anyway. A prize game works differently: buyers play a scratch card or spin a wheel, and only some of them win a discount. Some win 5%, a few win 20%, and the rest win nothing or a small extra. The average discount per order is lower, and you decide it in advance by setting the prizes and the odds.

    A game has its own costs: other prizes and the software. The calculator adds them, so you can see both options in the same terms. It does not tell you which one sells more. That depends on your shop, your customers and the offer, so test it on your own traffic.

    How to use the calculator

    1. Enter your own numbers. Orders, average order value and gross margin for the same period, for example a month.
    2. Set scenario A. The discount you would give on every order.
    3. Set scenario B. The discount prizes, the share of players who win each one, other prizes, the software cost and the share of buyers who play.
    4. Compare. Look at the margin given away and the extra orders each option needs to break even.

    For ideas that replace the standard 10% sign-up discount, read lead magnet ideas for e-commerce. For seasonal sales, see gamified Black Friday pop-ups.

    Run a prize game in Scratcher

    In Scratcher, you set the discount prizes, how many there are and the chance of winning each one. Codes are given out automatically, and the game collects email addresses and consent. Read how brands use games to increase sales, and work out the odds with the prize odds calculator.

    Questions

    Questions about the cost of a discount

    Book a meeting

    • Multiply your sales by the discount. 1,000 orders of €60 with 10% off cost €6,000 in margin. To see how many more orders you need to make up for it, divide the discount by your margin minus the discount.

    • Use discount ÷ (margin − discount). With a 50% margin and 20% off, that is 20 ÷ 30 = 67%. You need two-thirds more orders just to keep the same gross profit.

    • Because the discount comes out of your margin. With a 40% margin, 10% off takes 10 of the 40 points you earn on each order, which is a quarter of your profit per order.

    • No. It depends on the prizes, the odds, the share of buyers who play and the fixed costs. With few orders, the software and other prizes can cost more than a small discount. Enter your own numbers to see.

    • No. Use prices and costs without VAT throughout, so the margin and the discount are on the same basis.