How to determine if discounts are leading to profit?

You can use the following formula to calculate your discounted profit margin and compare it to your profit margin without the discounts:

• Gross Profit Margin Percentage = Revenue - Expenses / Revenue

Once you have calculated your revenue, you can calculate your new Gross Profit MArgin Peercentage with the following:

• New Gross Profit Margin Percentage = Gross Profit Margin Percentage x Conversion Rate x (Average Order Value x (1 - Discount Rate) / Average Order Value)

Using this formula and comparing the results to your profits before discounts will help determine if your discount program is increasing profits or cutting into revenue.