Fixed-Discount Loyalty Card: How to Calculate the Economics and Run a Test

A fixed discount on a loyalty card should be launched only after calculating the economics of the products. Lowering the price reduces gross profit per unit. To preserve the total amount, you need to sell more units. With a low margin, even a small discount can eliminate profit if sales volume does not increase.

First, define the product list and an acceptable discount rate. Then write down the customer terms, check a test purchase of your own, and compare the results of a limited launch. Decide whether to expand the program based on repeat purchases and the economic result after returns and costs.

Calculate the result for each product

The owner or person responsible for accounting should prepare the regular price, unit cost, and planned discount rate. Use comparable amounts: apply the same approach to including taxes in the price and cost.

Gross profit is revenue minus the cost of goods sold. Gross margin shows this profit as a share of revenue: gross profit ÷ revenue × 100%.

Record packaging, order fulfillment, and return costs separately. Products with the same price can have different economics because of these costs. Do not apply one discount rate to the entire assortment until you have calculated it for the specific product list.

Illustrative example: a 10% discount and the required sales increase

Suppose a store sells one product for 1,000 UAH with a unit cost of 600 UAH. The discount is 10% of the regular price. The cost remains unchanged, and there are no returns. All amounts are comparable. Other costs and taxes are excluded from this instructional calculation. The figures are illustrative and are not a forecast of program results.

In this example, sales volume increased by 10%, while gross profit fell by 7,000 UAH. To earn the previous 40,000 UAH at 300 UAH profit per unit, you need to sell 40,000 ÷ 300 = 133.33 units. Since units must be whole, round up: at least 134.

With the assumptions unchanged, the calculated increase is (400 ÷ 300 − 1) × 100% = 33.33%. Apply this calculation to the same product when its cost remains unchanged and gross profit after the discount is positive. For different products, total their actual results separately. Account for additional program costs on top of this calculation.

Write down the terms before issuing cards

Prepare short written rules. Give customers an opportunity to read them before purchasing. Under Ukrainian law, commercial electronic messages must clearly identify their commercial nature and provide accessible, unambiguous discount terms. Provide direct, simple access to the seller information required by Article 7 of the Law “On Electronic Commerce”, including licence information where the activity requires licensing. If stating a price, explain whether taxes are included and state delivery costs where delivery is offered.

• Define who can receive a card and under what conditions.
• Specify the fixed rate and the price it is calculated from.
• Include a specific list of products by name or SKU, along with any exclusions.
• Record the start and end dates of the test offer.
• Explain how the offer works when other discounts are available.
• Specify how to contact you about returns and changes to the program terms.

Article 15 of the Law “On Consumer Protection” includes, among the conditions for using the term “discount,” a defined and limited period of application and a price lower than the regular price. For a test offer, state its duration and the products sold by your store explicitly. Under Ukrainian law, if you publicly announce the discount, inform customers of each covered product’s previous and new prices. The customer price must include all taxes and mandatory payments payable by the customer upon purchase.

If you are revising rules that have already been agreed, agree on the new terms before new purchases. A contract may be amended by agreement of the parties unless otherwise provided by the contract or law. Once a contract has been performed, its price cannot be changed. Do not include a right for the store to change agreed terms at its own discretion.

Fixed discounts in a Torgsoft customer card

After agreeing on the rate, enter it in the customer card. The customer edit form opens from the “Клієнти” (Clients) form. In the “Спосіб нарахування знижки” (Discount calculation method) field, select “Фіксована” (Fixed), and enter the agreed value in the “% знижки” (Discount %) field. Instructions are available in the customer card guide and the article on setting up a fixed discount.

Make your own test purchase using products from the planned list. In “Реалізація” (Sales), a salesperson can identify the customer by scanning the loyalty card barcode when the cursor is in the “ШК/Арт” (Barcode/SKU) field. Calculate the expected price in advance and compare it with the sales result. In “Реалізація” (Sales), automatic discounts are selected separately for each product: the highest priority wins, and equal priorities are resolved by choosing the largest discount. A manual document discount overrides automatic discounts, while a manual product discount overrides all discounts. If the amount differs from what you expected, find out why before issuing cards.

To check returns, reconcile the actual sales and return documents: product, quantity, and purchase price. When a contract is terminated under Article 9 of the Law “On Consumer Protection,” settlement is based on the value of the product at the time of purchase. Setting a rate in the card does not replace calculating the program’s economics.

Run a controlled test

Before starting, record the objective: increase repeat purchases while maintaining an acceptable economic result. Set the observation period, budget, and decision criterion. Below is a working test plan for the owner.

1. Form comparable groups, taking account of customers’ previous purchase frequency and spending. Do not cancel existing discount rights to create a control group.
2. Assign participants to groups: the test group receives the new offer, while the control group keeps the previous terms. A participant must not belong to both groups at the same time.
3. Compare the same period and product list. Record accompanying promotions, price changes, and product unavailability.
4. Track sales, discounts, and returns for each group. Flag cases where a customer received the terms of the other group.
5. At the end, reconcile the documents and summarize the result. If conditions were not comparable, run a new test before expanding the program.

Assess repeat purchases alongside gross results

For each group, calculate net sales: sales before discounts minus discounts and sales reversals. Gross profit equals net sales minus the cost of goods sold. Reconcile returns against cost so that the cost of returned goods is not left in the calculation as an expense for goods sold.

Calculate the share of returning customers as the number of customers with previous purchases who bought during the selected period, divided by all customers in that period, and multiplied by 100%. Use the same definition for both groups. Separately, for each group, divide the number of assigned participants who had purchased before the test and bought again during it by all assigned participants who had purchased before the test, then multiply by 100%. Include participants who made no purchase during the test in the denominator. Record the group sizes and customer counts alongside the percentage: the percentage alone is not enough to make a decision.

Subtract packaging, order fulfillment, return processing, and card program costs from gross profit only if they have not already been included in the cost of goods sold. Count each cost once. If group sizes differ, also compare the result per assigned participant, including those who did not buy. Expand the program only after comparing these measures with the criterion recorded in advance.

Obtain separate consent for marketing messages

Issuing a card does not in itself mean consent to advertising. For advertising distributed and consumed in Ukraine, obtain prior written consent, including in electronic form, before contacting a customer through a phone number or other network identifier. Keep the consent text and a record that it was given. Provide a simple, free way to opt out at any time.

Collect data relevant to the program’s purpose and avoid excessive information. Under Ukrainian law, when customers provide their data, inform them who the data controller is, what data you collect, why you collect it, who receives it, and what rights they have under the Law “On Personal Data Protection”. If processing is based on consent, explain its purpose; consent must be voluntary and informed. The person has the right to withdraw it.

Sources for legal matters

• Law “On Consumer Protection”: Articles 9, 15, and 18.
• Civil Code of Ukraine: Articles 632 and 651.
• Law “On Electronic Commerce”: Article 10.
• Law “On Advertising”: Article 14³.
• Law “On Personal Data Protection”: Articles 2, 6, and 8.