How to Bring Up Your Gross Profit Margin Using a Mixed Discount Strategy

Say you’re a Shopify e-commerce brand planning out your discounting strategy for the biggest sales event of the year: BFCM.

From an execution standpoint, the easiest thing to do is offer a blanket discount on all your products and say something like, “25% off storewide.” Many brands do this, and it works well enough, but what if there’s a way to get just as many orders while giving away less in discounts?

The Mixed-Discount Strategy

Instead of offering a blanket 25% off discount, why not discount different items at different amounts: 15% off these products, 20% off those, and 25% off those… Now you can tell your customers, “Take up to 25% off storewide!” and their perceived value of the sale will be higher than your average discount per order. 

Heck, why not even leave some products undiscounted altogether? If a customer is shopping your site adding discounted items, they’ll probably throw some undiscounted items into their cart while they're at it, bringing down the average discount per order even more.

This strategy works wonders for your gross profit when running a big sale. It’s obvious when you think about it: by reducing your average discount per order, you increase your gross profit overall.

For Q4 2024, for example, I used this strategy with the artisan charcuterie brand Underground Meats, and reduced their overall discount rate for the quarter from 8.4% in 2023 to 5.6% in 2024. 

Bring down your discount rate and your gross profit margin will go up accordingly.

How to Discount Different Items at Different Percentages

If you want to discount different items at different percentages, one option would be to go through and discount each item on the product level, using the “compare-at price” field. 

But if you do this, beware that due to a Shopify limitation, the customer can apply any discount code they may have on top of the compare-at discount. 

For this reason, I’ve never found a good use for compare-at price. If you know of one, do let me know.

A better way to do it is by putting your products into different collections, and then assigning different discounts to the different collections. 

You’ll then need a way to call out the different discounts on your shop page.

Check out the tutorial at the top of this post for a step-by-step explanation.