Free tool · Robert × Dor
Promotion profit
calculator.
Compare a normal week with your planned discount, traffic and conversion lift and campaign cost to see the incremental profit, the sales lift you need to break even and a straight verdict.
Promotion profit calculator
Incremental profit over 2 weeks
−$1,379
Loses $1,379. You need sales 38.6% above normal to break even; your assumptions give +26.5%.
- Break-even sales lift
- 38.6%
- Full-price sales vs a normal week
- Your assumed lift
- +26.5%
- $15,000 → $18,975 a week
- Discount given away
- $4,554
- $2,277 a week
- Return on campaign cost
- −172%
| Per week | Normal | Promotion |
|---|---|---|
| Visitors | 1,500 | 1,725 |
| Conversion | 20.0% | 22.0% |
| Sales after discount | $15,000 | $16,698 |
| Gross profit | $7,500 | $7,210 |
The lift numbers are your assumptions. Pull-forward (sales that would have happened next week) and cheaper-item substitution aren’t modelled; both make real results worse.
Show your work
Normal sales = visitors × conversion × average transaction1,500 × 20.0% × $50.00 = $15,000Promo sales at full price = (visitors × (1 + traffic lift)) × (conversion + change) × (avg × (1 + change))1,725 × 22.0% × $50.00 = $18,975Promo gross profit = full-price sales × (margin − share discounted × discount)$18,975 × (50.0% − 60% × 20%) = $7,210Incremental profit = (promo GP − normal GP) × weeks − campaign cost($7,210 − $7,500) × 2 − $800 = -$1,379Break-even lift = (margin + cost ÷ (weeks × normal sales)) ÷ (margin − share × discount) − 1(50.0% + $800 ÷ $30,000) ÷ 38.0% − 1 = 38.6%
Worked example.
A gift shop normally sees 1,500 visitors a week, converts 20% and averages $50 a sale at a 50% margin: $15,000 in sales and $7,500 gross profit a week. It plans a two-week 20%-off promotion that it expects 60% of sales to use, with $800 of ads and signage.
- It expects 15% more traffic and conversion up 2 points: 1,725 × 22% × $50 = $18,975 a week at full price, a 26.5% lift.
- Discount given away: 60% × 20% = 12% of sales, so gross profit is $18,975 × (50% − 12%) = $7,211 a week.
- That’s $290 a week less than normal. Over two weeks, minus $800: −$1,379.
- Break-even needs (50% + $800 ÷ $30,000) ÷ 38% − 1 = a 38.6% sales lift.
A 26.5% jump in sales feels like a success on the till and still loses money. Cutting the discount to 10% on the same lift, or limiting it to half the range, turns the same promotion profitable; try it above.
Why promotions that feel busy can lose money.
A discount comes straight out of gross margin, because the goods cost you the same. At a 50% margin, 20% off a sale gives away 40% of the profit on it. Every discounted sale has to be replaced by more sales just to stand still.
The fair test is a comparison with a normal week, not with zero. Count traffic and conversion before, during and after the promotion: a real traffic lift shows up at the door; a conversion lift with flat traffic means you mostly discounted people who were already coming in.
Questions retailers ask.
How do I know if a sale or promotion was profitable?
Compare gross profit during the promotion with gross profit in a comparable normal period, then subtract the campaign cost. Higher sales alone don’t prove it worked, because the discount comes off your margin.
How much extra sales do I need to cover a discount?
Required sales multiplier = (margin + campaign cost ÷ normal sales for the period) ÷ (margin − share discounted × discount). At a 50% margin with 20% off everything and no campaign cost, that’s 0.5 ÷ 0.3 = 1.67, a 67% lift.
Why use margin instead of markup?
Because the discount is taken off the selling price. Margin (profit ÷ price) is on the same base, so subtracting the discount from it is exact. Convert markup first: margin = markup ÷ (1 + markup).
What does share of sales discounted mean?
The portion of promotion-period sales that actually get the discount. A storewide sale is 100%. A deal on selected lines, or a code only some shoppers use, is lower.
What isn’t included?
Pull-forward (customers buying now instead of later), customers switching to cheaper items, and after-effects like new customers who return. Measuring traffic and conversion after the promotion shows whether any of these happened.
Did the promotion bring people in?
Dor counts every visitor, so you can see whether a promotion lifted traffic, conversion or neither, hour by hour against your POS.
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