How discounts affect percentage fees and product profit
Percentage fees may fall with a discount while product and fixed transaction costs stay the same. Model both effects.
Open the Discount Profit Calculator →Separate the costs that move with price
A percentage charge on the sale can fall when the price is discounted. A fixed payment charge, materials and the parcel cost may stay the same. List those cost types separately instead of assuming the percentage reduction in price also reduces every expense.
For illustration, with £20 price, £10 other direct costs, a 10% fee and £0.30 fixed charge, contribution is £7.70. A 20% price discount gives £16 revenue, £1.60 percentage fee and the same £10 plus £0.30 costs, leaving £4.10.
| Scenario | Revenue | Percentage fee | Other/fixed costs | Contribution |
|---|---|---|---|---|
| Ordinary price | £20 | £2 | £10.30 | £7.70 |
| 20% discount | £16 | £1.60 | £10.30 | £4.10 |
Use the actual delivery and advertising arrangement
Check whether the discount applies to the item price, the complete basket or a delivery-inclusive offer. Include buyer delivery in the fee base where the platform rule requires it, and keep seller postage expense separate. Removing a delivery charge is also a revenue change.
Conditional advertising charges may apply to some orders and not others. Calculate an attributed-ad case alongside the ordinary promotion if relevant. A simple fixed-cost discount comparison is useful, but the full product tool is better when several fee components move with the price.
Recheck thresholds and exact manual charges
A price change may cross a fee threshold or alter a capped charge. An exact manual fee entered for the old price stays fixed until you update it. Recalculate the actual charge for each scenario or use a verified rate structure suited to that price.
Keep the resulting contribution and volume target together. In the illustrative £7.70 to £4.10 case, the same total contribution needs about 1.88 times as many sales before wider changes. That is a required-volume calculation, not a forecast of the promotion's demand.
A worked example
A £20 item discounted to £16 reduces an illustrative 10% fee from £2 to £1.60. A £0.25 fixed fee stays £0.25, and £12 product cost remains £12.
Before you use the result
- Separate percentage, fixed and direct costs.
- Apply the discount to the actual customer offer.
- Include conditional advertising where relevant.
- Recalculate thresholds and manual charges.
- Compare total contribution and practical volume.
Common questions
Do all fees decrease with a discount?
No. Percentage components may change under the applicable fee base, while fixed charges and many fulfilment costs remain. Some tiered or programme rules also need a separate check.
Why can profit fall faster than selling price?
The price reduction comes from revenue while many costs stay fixed. In the example, a 20% price reduction cuts contribution from £7.70 to £4.10. The percentage-fee saving recovers only part of the lost revenue.
Put the numbers into practice
Discount Profit Calculator →How many extra sales does a discount need? →How to compare a product price increase or reduction →Etsy fees explained: UK and US seller profit inputs →A practical calculation guide, not professional accounting, legal or tax advice. Examples are illustrative unless identified as official. Calculation methodology and limitations.