How do I test optimal discount thresholds?

Testing Optimal Discount Thresholds

Finding your minimum effective discount is one of the most valuable optimization exercises in e-commerce. The goal is to offer the lowest discount that achieves your conversion target - saving margin on every transaction.

Testing Framework

1. Start with your current discount level as the control
2. Create test variants at 5% below and 5% above the current level
3. Run all three simultaneously with equal traffic split
4. Measure: redemption rate, revenue per session, and margin per transaction
5. Identify the discount level that maximizes net revenue (not just conversion rate)

Threshold Test Example

In this example, 15% is the optimal threshold - higher conversion than 10% without the margin erosion of 20%.