Guide

How to Run a Sale Without Losing Money

A sale feels busy and can still leave you with less than a quiet week at full price. Work out the numbers before you choose the discount.

A discount comes out of profit

Your cost does not fall when your price does. A product that sells for $24.00 and costs $9.00 earns $15.00. At 20% off it sells for $19.20 and earns $10.20.

The price fell by 20%. Your profit on each sale fell by 32%.

How many more you need to sell

If you normally sell 100 in a month, you earn $1,500. At $10.20 a sale you need 148 sales to earn the same. That is 48 more than usual, just to stand still.

Before any sale, ask whether the discount will really bring that many extra orders.

Good reasons to run one

To clear stock that is tying up cash you could put into better sellers.

To win new customers who are likely to come back at full price.

To reward existing customers, which costs less than finding new ones.

Ways to give less away

Offer free postage over a set order value instead of a percentage off.

Discount a bundle, so the buyer saves and the order is larger.

Put the sale on selected products with the most margin to spare.

Keep it short, and say when it ends.

Look at the result afterwards

When the sale is over, add up the profit it earned and compare it with a normal period of the same length. That tells you whether to run it again.