Free tool
Promotion Margin Calculator
Test whether extra orders cover the margin given away.
A promotion can increase order volume while leaving less contribution behind. This promotion margin calculator compares the plan with an explicit same-window baseline: what you expect to happen if the promotion does not run.
Separate orders you believe the promotion adds from baseline purchases that would have happened anyway but now receive the discount. Then include the promotional cost stack and one-off campaign costs. The Discount Margin Calculator explains a single discounted sale; this tool tests the contribution consequences across the promotion window. The Returns Profit Calculator can help you examine the separate return-cost assumptions.
Same-window comparison · Entered demand assumptions · Contribution before fixed overhead
Without promotion
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Promotion assumptions
Promotion costs
How this tool works
How the promotion comparison is calculated
First calculate the contribution from a regular order and a promotional order. The promotion order uses the discounted revenue and its own variable-cost, acquisition-cost and additional-return assumptions. Promotional variable and acquisition costs replace the regular allocations; they are not stacked on top of them.
Incremental orders add promotional contribution. Cannibalized orders replace regular contribution with promotional contribution, creating a gain or loss equal to the difference. Combine those effects and subtract one-off campaign costs for the contribution change; other baseline orders retain their regular economics. The required-order threshold holds cannibalization and unit costs fixed and rounds up to whole incremental orders. It is a condition the promotion must meet, not measured causal lift or a demand forecast.
Contribution change = incremental orders × promotional contribution per order + cannibalized orders × (promotional − regular contribution per order) − one-off promotion costs.
More orders, lower total contribution
Suppose 1,000 regular orders each leave $47 after included product, variable and acquisition costs. A 20% promotion on a $100 regular order leaves $24 after $35 product cost, $8 variable cost, $12 acquisition cost and $1 additional return burden. With 250 incremental orders, 400 cannibalized orders and $1,000 campaign cost, contribution changes by $6,000 − $9,200 − $1,000 = −$4,200. Total orders rise to 1,250, while contribution falls from $47,000 to $42,800. Holding those assumptions fixed, 425 incremental orders would be needed to match baseline contribution, equivalent to 42.5% of the 1,000-order baseline.
Your full calculation
| Measure | Result · USD |
|---|---|
| Contribution without promotion | $47,000.0 |
| Regular contribution per order | $47.0 |
| Promotion net revenue per order | $80.0 |
| Promotion contribution per orderAfter entered acquisition and additional return costs; excludes one-off promotion cost. | $24.0 |
| Incremental orders | 250 |
| Cannibalized orders | 400 |
| Total promotional orders | 650 |
| Total orders with promotion | 1,250 |
| Contribution from incremental orders before extra returns | $6,250.0 |
| Cannibalization impact before extra returns | -$8,800.0 |
| Additional return impact | -$650.0 |
| One-off promotion cost impact | -$1,000.0 |
| Discount given on promotional ordersDescriptive discount amount, not an extra deduction from the modeled change. | $13,000.0 |
| Contribution with promotion | $42,800.0 |
| Change in contribution | -$4,200.0 |
| Minimum incremental orders for non-negative changeHolds cannibalized orders and all unit costs fixed; a required condition, not a demand forecast. | 425 |
| Required incremental uplift versus baseline orders | 42.5% |
Questions & answers
Understanding your result
What counts as an incremental promotion order?
An incremental order is one you assume would not have happened in the same window without the promotion. A higher before-and-after order count does not prove that number. Seasonality, customer mix and other activity can also affect sales, so pressure-test the assumption.
What are cannibalized orders in a promotion?
They are baseline orders that you expect would otherwise have occurred at the regular economics but now receive the offer. Their effect is the difference between promotional and regular contribution. Their count cannot exceed the no-promotion baseline orders in this model.
Why can a promotion sell more but make less contribution?
The contribution from added orders may be smaller than the margin given away on baseline orders, extra acquisition or return costs and campaign costs. The comparison makes each effect explicit, rather than treating every promotional order as additional demand.
How many extra orders are needed to cover a promotion?
First calculate the contribution gap from the fixed cannibalized-order assumption and one-off campaign cost. If that gap is already covered, the minimum is zero. Otherwise divide the gap by positive promotional contribution per order and round up to whole orders. If each added order contributes zero or a negative amount, more orders cannot close a positive gap under those assumptions. The required uplift expresses that order threshold relative to baseline orders.