Before You Run a Diwali Discount, Check Your Real Profit Margin
- Your real margin is the selling price minus product cost, packaging, delivery, payment fees and the ad or marketing cost to get the order.
- A 30% discount can cut your profit per order by more than half, and turn it into a loss if you are also paying for ads.
- Calculate your margin at the discounted price before you announce any offer.
- Bundles, free gifts, free gift-wrap or free shipping above a cart value often protect profit better than a flat discount.
Every Diwali, small brands announce "30% off" because everyone else is doing it. Orders come in, the month feels busy, and then the numbers come in and there's very little left. The problem is usually not the sales. It's the margin.
What "real margin" means
Your real margin is what you keep from one order after every cost of that order:
- Product cost (materials, making)
- Packaging (box, tissue, tape, thank-you card)
- Delivery (what you pay the courier)
- Payment fees (payment gateway or marketplace commission)
- Marketing cost per order (ads, creator fees, divided by the orders they bring)
A worked example
Here is an example with simple numbers. Your numbers will be different, so plug in your own.
| Full price | 30% off | |
|---|---|---|
| Selling price | ₹999 | ₹699 |
| Product cost | ₹350 | ₹350 |
| Packaging | ₹40 | ₹40 |
| Delivery | ₹70 | ₹70 |
| Payment fee (2%) | ₹20 | ₹14 |
| Profit before marketing | ₹519 | ₹225 |
| Ad cost per order | ₹250 | ₹250 |
| Real profit | ₹269 | –₹25 (loss) |
The discount took ₹300 off the price, but it took almost 60% off the profit before marketing. Once ads were included, every order lost money. The more you sell, the more you lose.
How to decide your Diwali offer
- Calculate your real margin at full price.
- Calculate it again at the discounted price. If it goes near zero or below after marketing costs, the discount is too big.
- Set a floor. Decide the minimum profit per order you need, and never price below it.
Offers that protect your margin
- Bundles: "Buy 2 for ₹1,699" raises the order value while each item keeps a healthier margin.
- Free gift above a cart value: a small, low-cost add-on feels generous and costs you little.
- Free gift-wrapping: very valuable at Diwali, cheap for you.
- Free shipping above a set amount: nudges people to add one more item.
- Early-bird price: a small discount for the first few days only, then full price.
Want to check your numbers in a minute? Our free TrueMargin calculator shows your real margin per product, including discounts and delivery, with no signup.
Common questions
How do I calculate real profit margin for a product?
Take the selling price and subtract product cost, packaging, delivery, payment or marketplace fees, and the marketing cost per order. What remains is your real profit per order; divide it by the selling price for the margin percentage.
Is a 30% Diwali discount a good idea for a small brand?
Only if your real margin stays healthy at the discounted price after delivery, fees and ad costs. For many small brands, a 30% discount cuts profit per order by more than half, so bundles or free gifts are often safer.
What are good Diwali offers that don't hurt profit?
Bundles, a free gift above a cart value, free gift-wrapping, free shipping above a set amount, or a short early-bird price.