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Discount vs AOV Tradeoff Calculator

Bigger baskets are easy to celebrate until the discount needed to create them starts eroding the contribution underneath. Use this calculator to test whether the uplift really offsets the promotion or just makes the top line look prettier.

  • Compare AOV lift against contribution lost to discounting
  • Estimate per-order and monthly contribution change
  • See the basket uplift needed just to get back to baseline

Test the discount against the basket lift

Start with baseline AOV and contribution margin, then layer in the discount depth and the basket uplift you expect from the promotion. The result shows whether the tradeoff still adds contribution or simply inflates revenue while margin gets softer.

Three offer tradeoff scenarios.

Formula

What the tradeoff is testing

Monthly contribution change = (Adjusted contribution per order - Baseline contribution per order) × Monthly orders
Basket uplift needed at parity = (Baseline margin / (Baseline margin - Discount rate)) - 1

This model assumes the discount applies to the larger basket and that product cost scales with the goods inside that basket. The question is not whether revenue rises. The question is whether the promotion leaves more contribution after discounting than the baseline basket did without it.

Where the offer math gets romanticized

  • Teams stop at AOV lift and never compare the retained contribution per order.
  • The discount feels like a conversion tactic, so margin loss gets treated as secondary.
  • Monthly impact is guessed from enthusiasm instead of order volume.