Start with the simple target
With regular price p0, promotion price p1, variable unit cost c, aligned baseline volume q0 and fixed campaign spending F, a simple target is q* = [q0 × (p0 − c) + F] / (p1 − c), provided discounted unit contribution is positive. Funding that is fixed for this scenario reduces the numerator.
This threshold assumes the extra units contribute p1 − c. If some units are refunded or replace later sales, that assumption overstates the contribution earned by an additional gross promotion unit.
Make the response rates explicit
Let r be full-refund units divided by gross promotion units. Let d be supplied later displaced units divided by gross promotion units. Under the workbench's assumptions, contribution per additional gross unit is (p1 − c) − r × p1 − d × (p0 − c). The refund term gives back the full promotion price while treating unit costs as unrecovered.
Holding these rates constant is a scenario assumption. It does not imply that a larger campaign will retain the same return rate, customer mix or stockpiling behavior. A contract paying funding per incremental unit also needs its payout to vary with volume; fixed funding should not be used as a substitute for that contract model.
Worked example: 69% more units becomes 141%
A €50 product costs €25, the offer price is €40, the baseline is 1,000 units and fixed spending is €300. The simple target is 1,686.67 units. Add a 5% full-refund rate and later displacement equal to 10% of gross promotion volume: effective contribution per gross unit becomes €10.50.
| Assumption | Amount |
|---|---|
| Discounted product contribution | €15.00 per gross unit |
| Expected full-refund revenue | −€2.00 per gross unit |
| Later displaced contribution | −€2.50 per gross unit |
| Effective contribution | €10.50 per gross unit |
| Required gross units: €25,300 / €10.50 | 2,409.52; whole-unit target 2,410 |
| Required increase over baseline | 140.95% |
Prepare the return-adjusted worksheet
The return-adjusted-break-even template uses 1,600 observed gross units, 80 full-refund units and 160 later displaced units to establish those rates. The engine's minimum-volume calculation then holds the two rates fixed. The free discount calculator deliberately covers the simpler no-return case.
| Quantity | CSV field | Example |
|---|---|---|
| Gross promotion units | promo_units | 1600 |
| Full-refund units | returns | 80 |
| Later displaced units | post_promo_dip_units | 160 |
| Fixed campaign cost | promo_spend | 300 |
Know when no minimum-volume target exists
When effective contribution is zero or negative, more volume cannot recover a positive uncovered baseline. If fixed funding already covers that benchmark, the economics can instead create a maximum viable volume. A blank minimum target is therefore a meaningful result, not a spreadsheet failure.
Inspect the source records before applying a return rate. Shopify distinguishes sales reversals from physical returned quantity; cancellations, edits and partial refunds are not all equivalent to the full-refund units assumed here.
Frequently asked questions
Should I round the target percentage? Keep full precision in the calculation and round the whole-unit target upward for execution. A displayed rounded percentage may not reproduce the exact threshold.
Does reaching the target guarantee a profitable business? No. The model covers the specified contribution boundary and supplied counterfactual, not shared overhead, future demand or every business expense.
Put it to work
Source context
Guide text and examples were prepared independently for MarginTrial. Sources provide the stated methodological or product context. They do not validate the hypothetical commercial outcomes.