Profit Margin Calculator for Shopify

A first-visit discount is the 10-20% off popup you show new visitors to capture their email (e.g., 'Get 15% off your first order!'). It's damaging because: (1) You give it to EVERY new customer, whether they'd buy anyway or not. (2) It reduces revenue immediately before you know if they'll return. (3) With all your costs (COGS, ads, shipping, fees), margins are already thin—a 15% discount can cut your net profit in half or turn profit into loss. You're literally paying 15% of revenue to buy an email address.

When you offer 10% back in cash/credit, only 28% of customers actually redeem it (proven by industry data from thousands of Shopify stores). So your true cost is 10% × 28% = 2.6% of revenue. The other 72% never gets redeemed—it's pure margin protection. Compare that to a 15% first-visit discount which costs you the full 15% on every single sale immediately. Cash back protects 100% of your first-sale margin.

Most Shopify stores have: COGS 40-60%, ads/marketing 10-15%, shipping 5-10%, Shopify/payment fees 3-5%, other costs 2-5%. That's 60-95% of revenue gone before profit! If your AOV is $100 and costs are $75, you have $25 (25% margin). A 15% discount ($15) cuts that to $10 (11.7% margin)—a 53% profit reduction! This calculator shows your REAL margin after all costs, making the discount damage crystal clear.

With cash back, you give 10% back BUT customers don't redeem it immediately on their first purchase. You keep the full sale price, minus your costs—that's 100% of your margin protected on sale #1. The 10% credit sits in their account as an incentive to return. Only when they come back for sale #2 does it cost you anything (and only 28% actually do). Meanwhile, first-visit discounts cost you 10-15% immediately on every first sale.

Select your industry to see typical net margin ranges. Beauty: 25-35% net. Apparel: 20-30% net. Gadgets: 15-25% net (thinnest margins!). If you're in gadgets with 20% margin and give 15% first-visit discounts, you're down to ~8% margin—barely sustainable! The calculator shows if you're above, at, or below your industry average, and how cash back gets you back to healthy margins.

Three reasons: (1) Protect margins: 2.6% true cost vs 15% discount cost = 82.7% savings. (2) Build repeat customers: 28% return and spend 40% more per order when they do. (3) Stop the race to the bottom: First-visit discounts train customers to expect discounts forever. Cash back rewards loyalty without conditioning them to wait for sales. It's a fundamentally better business model for long-term profitability.