Most businesses offer discounts to boost sales and expect profits to follow.
And discounting does increase purchase likelihood for some customers.
But our analysis of sales data from 2019–2023 shows a surprising pattern: as discounts grow, average profit can collapse; especially for the Home office segment.
Therefore, discount strategy needs to be segment-specific and evidence-based to avoid large financial losses.

• • Data: Sales transactions and profit per order, 2019–2023 (segmented: Consumer, Corporate, Home Office).

  • Question: How does average profit change as discount levels increase for each customer segment?

• X axis: Discount level (0–85%).

• Y axis: Average profit per order.

• Each line = a customer segment (Consumer, Corporate, Home Office).

• At low discounts the segments have stable profits. But past ~50% discount, profits decline. The Consumer line falls the fastest and deepest; at ~85% discount the Consumer segment reaches nearly –$2,000 average profit.

  Insight: Deep discounts have a non-linear, highly negative impact on average profit for the Home office segment. Corporate and Consumer also decline but less steeply.

  Home office often buy lower volumes and purchase lower-margin items; extreme discounts remove the margin buffer and flip the transaction into a loss. Corporate buyers may purchase higher volume or negotiate different terms that preserve margins.

• Implications:

• Avoid blanket deep discounts. Limit very large discounts for home office retail segments.

• Segmented discount rules. Use smaller, controlled discounts for home office; allow negotiated or volume discounts for Corporate accounts where margins hold.

• Test discount thresholds. Implement A/B tests and monitor profit by segment (use alerts when average profit crosses a risk threshold).

• Revise loyalty incentives. Consider non-price incentives (bundles, loyalty points) for consumers rather than steep discounts. Discounts drive behavior, but beyond certain thresholds they destroy profit. A segment-aware pricing policy protects margins and keeps promotions profitable.