Practical promotion economics

Elastic revenue does not guarantee contribution

Inspect an assumed elasticity of −2 for a €50-to-€45 price change, then review its contribution implication.

Entirely synthetic case. The expected baseline and commercial inputs are deliberately supplied assumptions.

The decision

Does the implied demand response recover the lower unit margin?

Product–campaign rows1
Contribution change-€309
Gross unit lift23.5%

Source inputs

Campaign / productExpected baseline unitsPromotion unitsRegular / promotion priceVariable unit cost
Example daily essential
Synthetic elasticity assumption
1,0001,234.568€50 / €45€25

What to inspect

Open a row’s full contribution bridge, check the day-window alignment and cost allocation, then vary the expected baseline and response in Scenario studio. The portfolio result includes the recorded refunds, supplier support and displacement; unrecorded effects remain excluded.

Read the accompanying decision guide

Interpretation limits

The figures are generated from the same deterministic engine used by the workbench. They are not evidence from a merchant or a randomized test. A supplied baseline can make an offer look attractive or unattractive, so the baseline deserves the same scrutiny as the campaign’s realized sales.

How to read this case

The assumed constant-elasticity curve gives 1,234.57 units and €55,555.56 revenue. Contribution falls €308.64 versus the baseline.

Case-specific assumptions

  • Elasticity −2 is invented for this example, not estimated from retailer data.
  • Fractional units represent an expected-volume scenario; a realized-count review can use whole units.

Download the portable project JSON ↓