Discount Cost Calculator

The calculator compares your first-visit discount costs (welcome popup offers to capture emails) with cash back costs. It shows that discounts result in 100% loss, while cash back has a true cost of just 2.6% because 72% of credits are never redeemed. The remaining 28% who redeem generate up to 3× return on the credit value.

COGS (Cost of Goods Sold) represents the direct costs of producing your products. Including COGS gives you a more accurate picture of your actual profit loss from discounts, not just revenue loss. This is crucial for understanding your true margins and the real financial impact of your discount strategy.

Cash back has a 70-90% cost reduction because 72% of credits are never redeemed by customers. This means while you offer $100 in cash back, your actual cost is only about $2.60 (2.6%). With traditional discounts, you lose 100% of the discount amount immediately with no recovery or future benefit.

Cash back credits create a compelling reason for customers to return and make additional purchases. When customers redeem their credit (28% redemption rate), they typically spend 20-60% more than the credit value, generating up to 3× more repeat revenue compared to traditional loyalty points programs which have lower engagement and redemption.

First-visit discounts are the 10-20% off offers in welcome popups used to capture email addresses. While effective for list building, they attract one-time bargain shoppers and result in 100% margin loss with no guaranteed return. Cash back offers the same conversion power but with 70-90% lower costs and built-in repeat purchase incentive.

The 72% unredeemed rate is based on verified industry data from store credit and cash back programs. This high unredeemed rate is why cash back has a true cost of just 2.6% — the majority of credits go unused but still provide marketing value, brand goodwill, and customer acquisition. Even when redeemed, customers spend more than their credit value, generating positive ROI.