Offer Comparison Tool
Analyze 'BOGO' vs '% Off' vs '$ Off' promotions. See which offer structure protects your margin while maximizing perceived value.
Configuration
Base Product
Offer A (Percentage)
Offer B (Fixed Amount)
A20% Off
B$25 Off
Perception vs Reality
The winner is the one that keeps the most profit in your pocket.
The Winner
The option highlighted in Green gives you the most profit dollars per unit sold.
Psychological Check
If Option A is more profitable but Option B sounds bigger to the customer (e.g., 20% vs $5), you might choose B to drive volume.
Margin Safety
Ensure neither option drops your margin below your operational break-even point (usually 30-40% for e-commerce).
Execution Steps
Enter your Product Base Price and Unit Cost (COGS).
Configure Offer A (e.g., a Percentage discount).
Configure Offer B (e.g., a fixed Dollar amount discount).
The tool calculates the Profit per Unit for each scenario and highlights the winner.
Use this to find the 'sweet spot' where you give the customer the best perceived deal for the lowest actual cost.
Pro Strategy
- For low-cost items, 'Buy One Get One' (BOGO) often moves more volume than a 50% discount, even though the math is identical.
- Always calculate profit dollars, not just revenue. A high-revenue sale with $0 profit is a waste of inventory.
- Consider 'Free Shipping' as an Offer C. It often converts better than a discount and costs less.
Core Concepts
Rule of 100
Psychological rule: If price is < $100, use % off (20% off). If price is > $100, use $ off ($20 off). This maximizes the perceived size of the number.
Perceived Value
What the customer THINKS they are saving. '$50 off' might sound better than '10% off' on a $500 item, even if they are identical.
Margin Protection
Ensuring that your promotional price doesn't dip below your costs or erode profitability to unsustainable levels.
What is Offer Comparison Tool?
Offer Comparison modeling helps marketers choose the most profitable discount structure. It weighs the financial cost of a discount against the psychological impact on the consumer. The goal is to maximize perceived value (high conversion) while minimizing actual cost (high margin).
Best For
- • A/B testing email subject lines (e.g., '20% Off' vs '$10 Off').
- • Deciding on a site-wide sale structure.
- • Negotiating bulk deals with wholesale partners.
Limitations
- • Does not predict conversion rate (you must A/B test for that).
- • Assumes single unit purchase (doesn't account for AOV lift).
- • Ignores perceived value of non-monetary offers (e.g., Free Shipping).
Alternative Methods
Conjoint Analysis
Better for understanding which offer customers *actually* prefer.
Discount Ladder
Better for understanding volume requirements.
Industry Applications
See how this methodology generates real revenue uplift in different sectors.
High-Ticket Furniture
Selling a $2,000 sofa. Tested '10% Off' vs '$200 Off'.
Mathematically identical. Psychologically, '$200' felt larger than '10%'.
Supplement Subscription
Selling a $40 bottle.
Tested '25% Off' vs '$10 Off'.