Gift Card vs Discount Calculator from Profits Plus

Many businesses offer discounts on their products and services. In 2018, non-grocery retailers missed out on $300 billion in revenues - 12% of total sales - due to markdowns, according to research from retail think tank Coresight and inventory optimization firm Celect.

In the survey of more than 200 "senior retail decision makes", those responding pinned the blame for more than half (53%) of unplanned markdowns or "inventory misjudgments".

Look at the bottom line of your business; can you afford a 12% loss?

Being a business that discounts your products or services erodes your margins and sets the customer up to expect that your initial price is not the actual price they will pay.

What we have just described creates a customer who is now taught to look to your business only when you are offering a special price. This process does nothing to invite a customer to do business with you again.

A gift card in place of a discount works differently. Price integrity is maintained; customers return more frequently; profits increase. As this concept was tested, we found several things; the size of the average ticket becomes larger when offering this to the initial customer, and the average ticket becomes even larger with the customer who returns to use the gift card.

You should first determine the size of your average ticket. If your average sale is $40, then the gift card should be given for a higher dollar amount; perhaps $55 or $60. This is to incentivize the customer to spend more, at full margin, than they normally spend.

One of the businesses using this calculator found 82% of the gift cards were redeemed!

Use this calculator to see how the usage of a gift card will protect your margins, increase your sales, improve the average line count, and size of the average sale.

The yellow squares are where you insert the information about your business. The numbers you see in the yellow cells currently are there only as examples of how the calculator works.