% Product Discounts
Whether a product sells on its own merits or only ever sells because it's on offer.
What it means
% Product Discounts is the markdown given on a product divided by what those same units would have sold for at full price. It counts discount codes, automatic promotions and sale prices, and the denominator is that product's Gross Sales rather than Total Sales. So it measures how deeply the product is cut, not how much of your business it represents.
Show the math
Formula and a worked example
Product Discounts is every markdown applied to that product's lines — discount codes, automatic promotions and sale prices.
Gross Sales is what those same units would have brought in at the full list price, before anything came off.
Worked example. You sell 400 units of a €50 jacket, so Gross Sales is €20,000. You gave €3,000 back across a spring code and a mid-season sale. % Product Discounts = 3,000 ÷ 20,000 = 15%.
Here's what that 15% costs. At a 45% Gross Margin the jacket earned €22.50 a unit at list. The discount takes €7.50 off the price and all €7.50 off the margin, leaving €15 — a third of the profit on every unit, given away to move them.
It answers the question
Is this product being chosen, or bought because it was cheap? A low number means the demand is real; a high one means the price cut is doing the selling for you.
Why it matters
A discount is one of the most expensive forms of marketing you can buy. There's no click to pay for and no impression to win — the money comes straight off the price, so every point of markdown is a point of Gross MarginGross MarginProfit after product cost; the ceiling on what you can spend to grow.60% or more is healthy gone at full strength.
It's the sale rail at the front of your shop: useful for clearing what didn't move, ruinous when your best sellers end up on it. Per product is the only way to see which, because a store-wide figure averages the truth away.
What good looks like
These bands assume a store that runs a handful of promotions a year. A deliberate clearance line will sit above 22% and should — the question is what else is up there with it. Read every figure against that product's own Gross Margin: 25% off survives comfortably on a 65%-margin product and wipes out a 30%-margin one.
How to improve it
| Lever | What you do | Expect | How long | Watch out for |
|---|---|---|---|---|
| Fast Stop the stacking | Turn off code-plus-automatic combining and exclude your top sellers from site-wide codes | 2–5 points off on those lines | 1 week | Customers who expected to stack will complain, and a few abandon at checkout. Order count dips before margin recovers. |
| Fast Put a minimum spend on every code | Replace open percentages with a threshold set above the current basket for that product | 1–3 points off, and a bigger basket with it | 2 weeks | Fewer people redeem, so a campaign that used to drive volume drives noticeably less of it. |
| Slow Swap the markdown for a gift or bundle | Give an add-on that costs you cost price instead of a percentage that costs you retail | 3–8 points off | 1 quarter | You're now holding stock of the giveaway, and bundles convert worse than a straight percentage while people learn the offer. |
| Slow Reprice the product and take it off promotion | Set the everyday price where the discounted price already sits, then stop discounting it | Close to zero on this number | 1–2 quarters | Your headline price drops for everyone, including people happily paying full price. The discount line disappears but Gross Margin per unit falls with it. |
Every lever costs something somewhere. The last column is the one to read twice.
Read it with
Depth on its own says nothing about whether the discount worked. Reading it against Quantity is what turns it into a decision.
Selling on its own
Demand is real and you're not paying for it. This is the product to put in front of new customers and to protect from blanket promotions.
Bought, not chosen
The volume is coming from the price cut. Fine while the markdown still fits inside the margin, and a slow way to lose money once it doesn't.
Clean but quiet
Nothing is wrong with the pricing — the product isn't being seen or isn't being wanted. Discounting it now would solve a problem you don't have.
The worst square on the page
You're giving away more per unit and moving fewer of them. Deeper cuts have stopped working, so cut once on purpose rather than repeatedly by accident.
Depth alone never tells you whether a discount hurt. Together these two say whether the markdown fits inside the margin or eats through it: 20% off a 65%-margin product is a promotion, and 20% off a 30%-margin one hands over two-thirds of the gross profit.
Heavy discounting earns its keep when it buys people who'd never bought from you. If markdown climbs while New Customer stays flat, the money is going to customers who were already coming.
Common misreads
It can equally mean nobody has ever promoted it, or that the discount was applied across the whole order rather than to this line. Read it beside Quantity — a product at 0% that sells 3 units a month has proved nothing about its price.
Check the date range before you accept that. A week at 40% off that carries a fifth of your year's Gross Sales reads as 40% across that week and about 8% across the year — the same markdown, two numbers you'd act on differently.
Sales going up is the one thing a discount always does. The question is whether Gross Margin in euros went up with them. Check Returning OrdersReturning OrdersHow much of your volume loyalty drives.35% or more is healthy on the next cycle before you repeat the promotion.
Also called
Discount rate · markdown rate · discount depth · promo depth
See yoursYour % Product Discounts for the period, with % Prod. Disc. per product in the table underneath.
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