Shopping & Business Calculators

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Discounts, margins and ad spend: pick by the question

Three different questions live under this heading. What will I actually pay? is a discount question. What am I making per unit? is a margin question. Can I afford to buy the click? is a break-even return-on-ad-spend question. Using a discount calculator to answer a profitability question, or the reverse, is where most errors start.

On discounts, the order of operations matters. Percentage discounts applied one after another compound; two successive 20% discounts do not make 40%, they make 36%. Sales tax is then applied to the discounted price, not the original one.

Start with the discount calculator for the price you will pay, the the margin calculator and its cousin below to price from cost before you commit budget.

Common mistakes to avoid

• Adding stacked percentages together instead of applying them in sequence.
• Applying sales tax to the pre-discount price.
• Treating ROAS as profit, it is revenue per unit of ad spend, and says nothing about product cost.
• Comparing a margin percentage against a markup percentage as if they were the same measure.
• Setting ad budget from a ROAS target without checking whether the margin can support it.

Frequently asked questions