Scenario guide

Promotions, Volume Lift and Shipping Subsidy Economics

Decide whether a discount or shipping subsidy is supported by additional order volume and contribution.

How to use these calculators

A promotion can grow top-line sales but reduce total contribution. Compare regular and promotional unit economics, then separately estimate the shipping subsidy cost for a representative order. Consider incremental fulfillment and campaign spending before declaring a promotion profitable.

A worked scenario

Regular price $75, unit cost $40, discount 20%, baseline volume 100, promotion volume 180. Separately, $50 order less $24 product, $8 fulfillment, $5 subsidy and 10% seller fee.

Promotion contribution lift: $100; example subsidized order contribution: $8.

A positive promotion lift does not automatically cover additional campaign expenses or inventory handling.

How to plan this decision

  1. Compare contribution not revenue

    Run both total-profit scenarios on the same time frame.

  2. Keep costs separate

    Avoid double counting shipping subsidies as a fulfillment charge.

  3. Test order mix

    Account for customers who would have purchased without the discount.

Read the detailed worked guide →

Start with the formula

Learn why margin and markup produce different percentages and how to use each one when setting prices.

Read Margin vs. Markup: the Difference That Changes Your Pricing →

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