The 23% Discount Threshold: Finding the Tipping Point for Promotional Impact

The Promotion Paradox

Most ecommerce brands run promotions constantly. Weekly sales, seasonal events, loyalty discounts, flash deals. The assumption is simple: discounts drive sales.

But what if most of your discounts aren’t actually doing anything?

When we modelled the promotional impact for a D2C brand with a strong Black Friday and seasonal sales cadence, we found something that challenged everything they believed about their discount strategy.

Discounts below 23% of gross sales had zero measurable incremental impact on transactions.

Not low impact. Not marginal impact. Zero.

Where the 23% Number Came From

Marketing mix modelling doesn’t just measure media channels. It captures every variable that influences sales, including pricing, promotions, seasonality, and external factors.

For this particular brand, we isolated the promotional effect by modelling discount depth against transaction volume across two years of data. The pattern was clear: there was a threshold below which promotions generated no additional transactions beyond what would have happened organically.

That threshold sat at 23% of gross sales.

Below it, the brand was effectively giving away margin for nothing. Customers who would have bought anyway simply paid less. Above it, genuine incremental transactions appeared, with 80% of the promotional lift coming from new customer acquisitions rather than existing customers buying more.

Why Most Discounts Don’t Work

This finding makes intuitive sense when you think about consumer psychology in considered purchase categories.

If someone is researching a $500+ product and they see a 10% discount, that’s $50 off. For a purchase they’ve been considering for weeks or months, $50 rarely tips the decision. They were either going to buy or they weren’t.

At 15%, you’re at $75 off. Still not enough to change behaviour for most shoppers in a considered category.

But at 23% or above, something shifts. A $115+ discount on a $500 item starts to feel like a genuine reason to act now rather than later. It creates urgency that smaller discounts can’t match.

The brand in question had been running weekly promotions, many in the 10-15% range. They were training their customers to expect discounts without actually driving incremental sales.

The “Always on Sale” Problem

This brand had an uncomfortable truth to confront: at any given time, roughly 75% of their catalogue was discounted in some form. Discount codes were embedded in the customer journey, from email flows to checkout page prompts.

When everything is on sale, nothing is on sale. The baseline becomes the discounted price, and customers simply wait for the next promotion rather than buying at full price.

The modelling revealed that promotional periods only showed incremental impact when the discount was deep enough to break through the noise of their always-on discounting strategy.

What Changed After the Finding

The implications were straightforward:

Fewer, deeper promotions. Instead of weekly 10-15% discounts that erode margin without driving volume, the brand could focus on fewer promotional events with discounts above the 23% threshold where genuine incremental impact occurs.

Protect full-price periods. By reducing the frequency of promotions, full-price periods become the norm rather than the exception. This protects margin and makes genuine sales events feel more compelling.

Measure promotion and media separately. The model showed that promotional lift and media-driven lift are distinct effects. A campaign running during a promotion gets credit for both, which inflates the perceived ROI of the media. Separating these effects gives a clearer picture of what each investment actually delivers.

Segment new vs. existing customers. Since 80% of the incremental lift above the threshold came from new customers, the brand could design promotions specifically to drive acquisition rather than rewarding existing customers who would have bought regardless.

The Broader Lesson

Every brand has a discount threshold. The number won’t be 23% for everyone. It depends on your category, price point, competitive landscape, and customer behaviour.

But the principle is universal: there is a level of discounting below which you are simply giving away margin, and a level above which you genuinely change customer behaviour.

Most brands don’t know where their threshold sits because they’ve never measured it properly. Platform analytics show you that revenue went up during a sale period. They don’t tell you whether those customers would have bought anyway at full price next week.

Marketing mix modelling captures the counterfactual. What would have happened without the promotion? That’s the only way to know whether your discounts are driving incremental value or just subsidising inevitable purchases.

The Takeaway

Before you plan your next promotional calendar, ask yourself: do you know your discount threshold? If not, you might be running promotions that cost you margin without generating a single additional transaction.

The answer isn’t to stop discounting. It’s to discount with purpose, at a depth that actually moves the needle, and to measure whether it worked with a model that captures the full picture.