What is promotion net effect?

Promotion net effect asks the only question that matters about a discount code: after the giveaway, did the orders it touched still make money? It is the contribution margin of a promotion's orders minus the discount granted on them. A negative net effect means the promotion's orders, even counting all their margin as the promotion's doing, did not cover what it gave away.

Formula

net effect = Σ order contribution margin − Σ discount given
             over the orders the promotion touched

Worked example

A 20%-off code touches 340 orders, giving away €8,600 of discount. Those orders carry €7,100 of contribution margin after COGS, shipping and fees. Net effect: −€1,500 — the promotion paid customers to take margin away, and that is the generous reading, since some of those 340 orders would have happened at full price anyway. The worst-promotions widget lists exactly these negative rows, worst first.

How Saldo Metrics computes it

v_promotion_order_effect joins each discount application to its promotion and order at (promotion, order) grain, carrying the discount amount and the order's contribution margin under the order-grain cost rule: an order with any uncosted line has unknown margin (NULL), not zero, and its revenue is reported as uncosted rather than blended in. The worst-promotions widget aggregates the view per promotion over the selected period and keeps only promotions where summed margin minus summed discount is negative; the alert metric evaluates the same difference per promotion. An order touched by two promotions appears under both — the effect is per promotion, not a partition of the order book.

Why it matters

Promotions are the easiest place in e-commerce to lose money while revenue charts go up. Discount reporting usually stops at "revenue generated"; measuring against contribution margin, net of the giveaway, is what catches codes that work brilliantly on volume and terribly on profit — stackable codes and storewide percentages being the usual offenders.

Common mistakes

• Crediting the promotion with all touched-order margin. Many of those customers would have bought anyway; the true incremental effect is worse than the reported one. Treat the net effect as an upper bound.
• Judging a launch-week code on its first period. Acquisition promotions can run negative on first orders and pay back on repeat purchases — check the cohort economics of customers it acquired before killing it.
• Ignoring uncosted orders. A promotion selling mostly uncosted SKUs shows less margin than it earns; the view reports that revenue as uncosted rather than as zero margin, but the net effect is still incomplete until costs land.

Where you see this in the app

The Worst Promotions dashboard widget, and the promotion net-effect alert metric.