Offering coupons, special deals, and other types of customer savings can be a great way to turbocharge sales. But how do you budget for promotions and coupons in the Amazon store, and how can you estimate your costs for deals and discounts? This post covers the potential expenses you might have for each of these four promotional methods, plus strategies and tips so you can plan ahead and maximize your return on investment.
- What does it cost to offer customer savings in the Amazon store?
- How do promotion and coupon budgets work?
- How much does it cost to run a promotion (percentage-off or buy one, get one free)?
- How much does it cost to run a coupon?
- How do you estimate costs for a deal?
- How do you estimate costs for a price discount?
What does it cost to offer customer savings in the Amazon store?
Your costs for offering customer savings in the Amazon store can vary depending on how you structure your offers and what promotional strategies you use. Generally you can calculate your expenses based on the amount of customer savings you’re planning, plus any applicable costs to run the offer.
- Percentage-off
- Buy one, get one free (sometimes called “BOGO”)
- Customers can “clip” coupons or use codes to get a percentage or dollar amount off a product or set of products.
- Deals are promotional offers that run for a limited time. There are two types of deals in the Amazon store: Lightning Deals and Best Deals.
- A price discount displays a strikethrough price to show customers how much they can save.
How do promotion and coupon budgets work?
There are similarities in how budgets work for promotions and coupons in the Amazon store. For both, you can estimate your costs by setting a predefined budget in Seller Central. Your budget won’t be reduced by any additional costs to run or participate in a promotion or coupon. Those costs, if any apply, are separate from your budget allocation.
It’s important to note that the budget you set in Seller Central is for planning purposes only and isn’t a hard limit. In the event of high customer interest, it’s possible for your promotion or coupon spending to exceed the budget you set in Seller Central. But with the right strategy, you can offset your costs with higher revenue from increased sales.
Based on what works best for your business strategy, you can use a mix of ads, coupons, and other promotional methods.
We take your promotion or coupon offline when it reaches 80% of the budget you set in Seller Central. The remaining 20% is allocated for customers who’ve already applied the promotion or clipped the coupon, but haven’t yet completed a purchase. Those customers can still save if they purchase within a window of approximately 30 minutes in our US store after we disable discovery of the promotion or coupon. Your spending can exceed your budget if 20% isn’t enough to cover customer savings in the 30-minute window.
Setting higher budgets can help you avoid exceeding your budget. Even with higher budgets, any level of budget overshoot should be expected—especially during high-traffic events or when you offer more than one type of savings to customers. Budget overshoot can also occur rapidly if you set a low budget for a higher discount. For example, if you offer a 50% off coupon for a $20 product and set a budget of $100, only a few customers might get to interact with your coupon.
How to set up efficient budgets
Efficient budgets cover the amount of customer demand for the duration of your offer. To plan an offer, analyze your sales and estimate a low-end and high-end for your budget based on the levels of customer engagement you expect. Then set a budget so you’ll have enough funds to stimulate sales without running the risk of either going out of stock or exceeding your budget.
For example, if you have a product that sells an average of 20 orders per day, and you want to offer $5 off for 10 days, you can calculate a minimum budget by multiplying the promotion value, the number of average daily orders, and the number of days. In this example, 5 x 20 x 10 would give you a minimum budget of $1,000.
To make the most of your offer, consider factoring in a potential sales lift. Using the same example, if the product sells an average of 20 orders per day without a promotion and you estimate a 10% sales lift, then 10 x 22 x 5 would give you a minimum budget of $1,100.
Remember, you can offer more than one type of customer savings at a time in the Amazon store, so be sure to avoid unintentional stacking.
How much does it cost to run a promotion (percentage-off or buy one, get one free)?
In the process of creating either a percentage-off or a buy one, get one free promotion, you can set a budget for either currency amount or order count. As customers place purchases, the amount of customer savings will be deducted from your budget. So you can estimate your total cost based on the amount of customer savings you offer.
For example, you could create a “buy five to get 25% off” promotion for a $20 product and set a budget of $2,000. For each purchase, the budget would deplete by $25 (25% of $100). When the total number of redemptions reached 80% of $2,000 ($1,600), the promotion would go offline. If no further customers made purchases in the 30-minute window after the promotion goes offline, then your total cost would be $1,600 compared to $4,800 in sales.
Use the Promotions tool in Seller Central
How much does it cost to run a coupon?
To estimate your budget for a coupon that you create, consider the amount of the discount you offer to customers, and multiply it by the number of redemptions you anticipate. You can set a value ranging from $100 to $10 million in the budget field during the coupon creation process. It’s possible to overshoot your budget if you receive a large volume of orders in a short amount of time after the coupon deactivates. But we’ll take the coupon offline when customer redemptions reach 80% of the budget value you set.
For example, you could offer a $4 coupon on a $25 product and set the budget to $10,000. On the first day the coupon was active, if 50 customers redeemed it, your budget of $10,000 would be depleted by $200 ($4 x 50 redemptions) the following day.
Note that your budget wouldn’t be reduced by any additional costs to run the coupon. Costs to run a coupon, if any apply, are separate from your budget allocation. You can review any additional costs to run a coupon during the coupon creation process in Seller Central.
The amount deducted from your coupon budget to fund customer redemptions appears in the “Total promotional rebates” column in the “Transaction View” tab of your Payments dashboard. To get to the Payments dashboard, hover over Payments in the Seller Central main menu, then select Payments. Select the amount in the “Total” column to see more details on a specific transaction, including the product charges and your profit.
You can run multiple coupons at a time and add products to each. You can also track the performance of each coupon from your Coupons dashboard. To get there, hover over Advertising in the Seller Central main menu, then select Coupons. Select the View button next to each coupon for more details.
Use the Coupons tool in Seller Central
How do you estimate costs for an Amazon deal?
When we share a deal recommendation with you, the Deals tool suggests a deal price and quantity. You can review the cost to run a deal during the deal creation process. The cost may depend on whether you run the deal during a designated peak selling event like Prime Day, Black Friday, or Cyber Monday.
To estimate your total cost for running a deal, multiply the number of units you commit to the deal by the amount of customer savings you’re offering per unit, then add the cost to run the deal. If a variable cost applies, then you’ll also need to multiply the number of committed units by the relevant percentage of sales and either add that amount or the capped amount to your total cost.
A deal deactivates when it sells 90% of its committed units. But like with coupons and promotions, it’s possible to sell more units if you receive a large volume of orders in a short amount of time after the deal deactivates. So be sure to factor this into your calculations.
Use the Deals tool in Seller Central
How do you estimate costs for a price discount?
There may be a cost to run a price discount. If so, you’ll have the opportunity to review the amount during the discount creation process in Seller Central.
When you create a price discount, you’ll set a discounted amount and commit a number of units. To estimate your potential cost for running the discount, multiply the amount of customer savings you offer per unit by the number of units you expect to sell, then add the cost to run the discount, if there is one.
Use the Price Discounts tool in Seller Central
Improve performance with customer savings
With the right pricing strategy, various promotional methods can help you maintain healthy profit margins while giving sales a boost. Amazon promotions, coupons, deals, and discounts can help you get higher visibility for products, drive more conversions, and increase sales overall.
Once you start promoting products, be sure to monitor results and make adjustments accordingly. Seller Central can be a great source for metrics and data that can lead to insights and breakthroughs. For example, you can use the Deals dashboard in Seller Central to track sales, conversion rate, and more metrics for the deals you create.
Budgeting effectively and running special offers can help a product gain traction, leading to sales spikes and maximum profitability for your business. To get started, create an Amazon selling account, if you don’t have one already.
Learn more with our seller registration guide
Frequently Asked Questions
What’s the difference between a coupon and a discount?
Is there a downside to running Amazon coupons?
Does Amazon charge for coupons?
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