Real Cost of Discounts for Sellers
A 10% discount doesn't cost you 10% — it costs much more of your profit.
Why a 10% Discount Costs You More Than 10%
When you offer a 10% discount, the discount comes entirely from your profit margin, not from revenue evenly. If your margin is 30%, a 10% discount wipes out a third of your profit. Platform fees make it worse — the platform still charges fees on the original or discounted price, eating further into your margin.
Platform Fee Comparison
| Platform | Typical Fee | Fee Calculated On |
|---|---|---|
| Etsy | 6.5% + $0.20 | Discounted price |
| Amazon FBA | 15% + fulfillment | Discounted price |
| eBay | 12.9% + $0.30 | Discounted price |
| Shopify | 2.9% + $0.30 | Discounted price (payment only) |
| Faire (wholesale) | 15–25% | Discounted price |
When Discounts Make Sense for Sellers
Volume play: If a 10% discount increases unit sales by 20%+, total profit rises despite lower per-unit margin. Clearance: Discounting slow-moving inventory frees up capital and storage costs. Customer acquisition: A first-purchase discount can be worth it if customer lifetime value exceeds the discount cost.
The danger: Training customers to wait for sales. If you discount too often, customers learn to never buy at full price, permanently lowering your effective selling price.