How Much Should I Discount My Products?

What if your 25% off sale could have been 15% off with the same results?

That ten percentage points of unnecessary discount isn't generosity. It's profit you're lighting on fire. Yet most brands pick discount depths based on what sounds good, what competitors offer, or what they've always done.

The minimum effective discount (the smallest incentive that drives your desired outcome) isn't a number you guess. It's a number you discover through testing.

The Answer: Your Minimum Effective Discount (MED)

Discount to your MED, not to what feels safe or what competitors do

How much should you discount? To your Minimum Effective Discount (MED).

Your MED is the smallest discount that drives your desired behavior. Not the biggest discount customers will accept. Not what competitors offer. Not what "feels right." The precise threshold where customer action justifies the margin sacrifice.

Why your MED matters:

Most brands over-discount because they don't know their MED. They run 25% off when 15% off might convert nearly as well. That gap between what you offer and what you need represents pure profit left on the table.

Your MED isn't just about margin. It shapes customer expectations. Every unnecessary percentage point trains customers to wait for deeper discounts. Finding your MED protects both your margin and your brand value.

Your MED is unique to your business. Your products, your customers, your brand positioning, your competitive context. The only way to know your MED is to test. And once you find it, you can optimize every promotional decision around it.

Why Do Brands Over-Discount?

The expensive assumption: bigger discounts always drive better results

Here's the prevailing wisdom: Bigger discounts drive better results. 30% off beats 20% off beats 10% off.

Except when it doesn't.

Sometimes 15% off converts nearly as well as 25% off. Sometimes 10% off actually outperforms 20% off because it doesn't cheapen brand perception. The tragedy isn't just the margin you're giving away. It's that you're training customers to expect depths you never needed to offer.

Most brands never test whether their discount depth is optimal. They run 25% off because that's what they've always done, or because competitors do it. Meanwhile, their customers might have acted at 15% off. That might be their true minimum effective discount.

Your MED Exists Across Different Offer Structures

Every offer type has its own MED to discover

Your MED isn't just about discount percentages. Every promotional mechanism has its own minimum effective threshold to discover.

Percentage discounts: What's the minimum percentage that drives conversion? Your MED might be 15% instead of 25%.

Dollar amounts: What's the minimum dollar discount needed? It could be $15 instead of $30.

Free shipping thresholds: What's the minimum order value that drives cart building? This threshold might be $60 instead of $100.

Gift with purchase: What's the minimum order value that justifies adding items? It could be $50 instead of $75.

The principle is identical across all mechanisms: find this minimum for each offer type. This post focuses on discount depths since that's where most brands begin this discovery, but the testing approach works for any promotional structure.

Where Do Most Brands Start Testing?

Most brands test between 10-30%, but you can test any depth

There's no magic set of discount percentages. Most brands start by testing in 5% increments (10%, 15%, 20%, 25%, 30%) because they're easy to calculate and communicate.

But it might be 17%. Or 22%. Or 8%. The increments are just starting points for finding your unique minimum.

Common testing ranges:

• 10-15% for shallow discounts

• 15-20% for moderate promotions

• 20-30% for deeper sales

• 30%+ for clearance

The same customer might have different thresholds for different contexts. They might need 25% off when trying a new category but only 10% off to repurchase favorites. Testing reveals what works for YOUR customers in each segment and scenario.

How Do You Find Your MED?

A/B testing reveals your unique MED by isolating discount depth as the only variable

Testing is how you discover your minimum effective discount. The gap between what you currently offer and what you actually need is pure profit waiting to be recaptured.

What testing reveals:

You might discover you're over-discounting. A brand running 25% off might find their minimum effective discount is actually 15%, recapturing margin on every transaction.

You might find it varies by context. Email subscribers might need less than cold traffic. Repeat customers might need less than first-time buyers. You don't have one number. You have multiple for different customer segments.

You might uncover unexpected patterns. Sometimes it might be an odd percentage (like 17% off) that stands out more than round numbers because it feels calculated rather than arbitrary.

Plot conversion rates against discount percentages. You might find conversion jumps from 0% to 10% off, creeps from 10% to 20%, then flatlines above 20%. That plateau reveals the threshold: 15% drives nearly the same behavior as 20%.

It also affects customer quality. Deep discount buyers often have lower lifetime values. They came for the deal, not the brand. Testing reveals the minimum that attracts quality customers without resorting to bargain-hunter depths.

What's the Simplest Test to Find Your MED?

Test your current discount against shallower alternatives to discover your MED

Step 1: Establish Your Baseline

Test no discount performance to understand your natural conversion rate. Then run your typical promotion to establish your benchmark. This gives you the range within which it exists.

Step 2: Test Shallower to Find Your MED

Test three depths to bracket the minimum:

• Below current: If you typically do 20%, test 15%

• Current depth: Your usual 20%

• Above current: Test 25% (to confirm you're not under-discounting)

The goal is to find your minimum effective discount: the shallowest discount that still drives desired behavior.

Step 3: Run Until You Know Your MED

Finding it takes different brands different amounts of time. High-traffic brands might identify the threshold in weeks. Lower-traffic brands need longer. What matters is reaching confidence in the result, not the timeline.

Step 4: Measure Profit Per Visitor to Confirm Your MED

It isn't just about conversion. It's about profit per visitor, your North Star metric for this discovery.

Your minimum effective discount is the discount that maximizes profit per visitor, not just conversion. A depth that drops conversion 8% but increases profit per visitor 40% might be the optimal depth.

Track customer quality too. Measure lifetime value by acquisition discount. It should attract quality customers, not just bargain hunters.

Common Mistakes That Prevent Finding Your MED

Avoid these pitfalls that obscure your true MED

• Measuring only conversion rate: Your minimum effective discount maximizes profit per visitor, not just conversion. Revenue up but profit down means you haven't found the optimal depth.

• Ignoring customer quality: It should attract quality customers, not bargain hunters. Deep discount buyers often have lower lifetime values. Track repeat purchase rate by acquisition discount to confirm it attracts the right customers.

• Testing too many depths at once: Finding it requires focus. Start with three depths maximum. Testing too many variants simultaneously splits traffic too thin and delays discovery.

• Not considering context: You don't have one number. You have multiple. VIP customers might have a different threshold than new visitors. Different segments often require different minimums.

• Creating discount dependency: If customers only buy on sale, you've trained them to expect depths above this threshold. Test whether existing customers need any discount at all. It might be 0%.

Stop Guessing. Start Knowing Your MED.

Your minimum effective discount exists. It's somewhere between 0% and your current discount: a number that drives 90% of the results at 50% of the cost.

That number isn't in a benchmark study or competitor analysis. It's not what "feels right" or what you've always done. It's unique to your business, waiting to be discovered in your customer behavior.

Test shallower depths than you currently offer and measure profit per visitor. The data will reveal it.

Every percentage point above this threshold is margin you're giving away and customer expectations you're setting unnecessarily high. Finding it protects both.

Don't guess how much to discount. Know your minimum effective discount.

Ready to discover your minimum effective discount? Intelligems helps you find it through rigorous A/B testing. When you're ready to stop over-discounting, let's get you testing beyond what's typical.