Free DTC diagnostic
Every promo event looks like a revenue win. This tool shows what your promotional cadence is actually doing to contribution margin — the number that determines whether growth is profitable or just expensive.
Your promo structure
Common questions
Both matter, but depth has a non-linear effect on contribution margin. A 10% discount on a 40% CM product drops margin to ~33%. A 25% discount drops it to ~20%. At 30% discount, many DTC brands are running near-zero or negative contribution margin per discounted order. Frequency multiplies whatever depth you're running. See our deep-dive on how returns and discounts quietly compress margins.
Discount-driven orders attract a more price-sensitive customer segment with lower product commitment. Customers who impulse-buy from a 25%-off campaign are statistically more likely to return the product than customers who paid full price after considering the purchase. The return rate delta is typically 4–10 percentage points, which compounds directly on top of the revenue reduction from the discount itself.
Effective discount rate is the blended discount across all revenue — both discounted and undiscounted orders. If 35% of your orders use a 20% discount, your effective discount rate is 7%. This is the number that matters for P&L modeling, not the headline discount percentage you advertise. Your real contribution margin should be calculated against net revenue after effective discounts are applied.
Brands with healthy margin discipline typically run 1–2 major promotional events per month, limit discount depth to 10–15% for regular promos (reserving 20–25% for one or two anchor events like BFCM), and keep promo-driven revenue below 25–30% of total. Above those thresholds, promo dependency tends to erode both margins and customer willingness-to-pay at full price over time.