How deep can you discount for Black Friday and still make money?

Black Friday lands on Friday 27 November this year, with Cyber Monday on 30 November. For most small online stores, October is when the real decision gets made: how big is the discount going to be?

The usual way to decide is to look at what everyone else is running and match it. That’s how a brand with a 45% gross margin ends up advertising 40% off and working harder for less. This guide sets the discount the other way round — from your own numbers.

Why does a 30% discount cost more than 30% of your profit?

Because the discount comes off the price, but most of your costs don’t move.

When a customer pays less, the GST falls with it — GST is one-eleventh of the price actually paid if you’re registered for GST. The payment fee dips a little too, because it’s a percentage. But the product still cost what it cost to land. The box, the label and the courier cost the same. So every dollar of discount comes straight out of contribution per order — what’s left after GST, landed cost, shipping and fees, before ads and overheads.

Here’s an illustrative store selling an $80 product (GST inclusive), with free shipping built in.

Line	Full price	30% off
Price paid (GST inclusive)	$80.00	$56.00
Less GST (one-eleventh)	−$7.27	−$5.09
Less landed product cost	−$24.00	−$24.00
Less shipping and packing	−$9.50	−$9.50
Less payment fees (2% assumed)	−$1.60	−$1.12
Contribution per order	$37.63	$16.29

Illustrative only. Figures rounded. Use your own costs.

A 30% price cut has removed 57% of the contribution. That’s the number that matters.

How many extra orders does each discount level need?

The formula is short:

Orders needed = contribution at full price ÷ contribution at sale price

Run it at a few discount levels and the shape becomes obvious.

Discount	Sale price	Contribution per order	Orders needed vs normal	Break-even ROAS
None	$80	$37.63	1.00x	2.13x
10% off	$72	$30.52	1.23x (+23%)	2.36x
20% off	$64	$23.40	1.61x (+61%)	2.74x
30% off	$56	$16.29	2.31x (+131%)	3.44x
40% off	$48	$9.18	4.10x (+310%)	5.23x

Illustrative only, same assumptions as the table above.

Two things jump out.

First, the curve isn’t straight. Going from 20% to 30% off doesn’t need a bit more volume; it needs roughly 44% more on top. Going to 40% needs four times your normal orders to stand still. At about 53% off, this product leaves nothing at all — and that’s before a cent of ad spend.

Second, break-even ROAS climbs with the discount. ROAS is return on ad spend: attributed revenue divided by ad spend. Break-even ROAS is the level where ads just pay for themselves on the first order (the break-even ROAS guide walks through it). Ad costs usually rise in late November because every retailer bids at once. So a deeper discount needs better ad performance at exactly the moment ads get dearer.

If you’d rather not build the spreadsheet, the ad-spend payback calculator works out contribution and break-even ROAS for any price you plug in. Run it once at full price and once at your sale price.

What changed for card fees on 1 October 2026?

Surcharging. The Reserve Bank’s review concluded that card surcharges on debit, prepaid and credit cards on the eftpos, Mastercard and Visa networks end on 1 October 2026, and it lowered the caps on interchange fees at the same time (RBA media release). Other card networks aren’t covered by the change.

For a store that used to add a small card surcharge at checkout, that cost now comes out of the margin. For everyone, it’s a good reason to check the fee line in your contribution maths against your actual processor statement rather than a guess. Lower interchange caps may pull your fees down a little. The RBA expects small businesses to benefit most, but your own statement is the real test. Don’t assume a number; read it.

Which offers protect margin better than a sitewide cut?

A flat sitewide discount gives margin away on every order, including the loyal customer who was going to buy on Tuesday anyway. Offers that change what people buy often do better.

• Bundles. Two products for $140 instead of $160 is 12.5% off, but you ship once. In our example, the bundle leaves about $65 after costs (allowing $11 for a heavier parcel), compared with $37.63 for one single order. The customer feels the saving and you keep most of the margin.
• Spend thresholds. “$20 off when you spend $150” rewards bigger baskets. Set the threshold above your normal average order value, not below it.
• Free shipping over a threshold. You absorb one shipping cost on a larger order. Worth modelling if shipping is a big share of your cost stack.
• Gift with purchase. A product that costs you $6 to land can feel worth $25 to the customer. That’s a far cheaper hook than $25 off.
• Tiered or targeted discounts. Deeper offers for lapsed customers or email subscribers, shallower ones for cold traffic, so you’re not discounting the people who’d pay full price.
• Excluding thin-margin lines. Some products just can’t carry a discount. If you exclude them, say so clearly (more on that below).

If the numbers work at your chosen offer and stock is the only thing holding you back, see what funding might suit your store. It’s a 60-second enquiry with no credit check.

Where does the cash go between October and February?

Black Friday is a margin decision and a cash decision. The margin maths can be right and the cash can still run short, because the timing is lopsided:

1. October — stock and deposits. You pay suppliers now for goods you’ll sell in five to eight weeks. Imported lines may need a deposit even earlier.
2. Mid to late November — ad spend peaks. Ad platforms bill as you spend, often before the sales money has cleared.
3. Late November to December — sales and payouts. Money arrives in waves as your payment providers pay out. Check your own payout schedule; don’t assume.
4. January — returns and the slump. Refunds for Black Friday and Christmas orders land when sales usually drop off.
5. 28 February — the October–December quarter BAS, for most quarterly lodgers. That quarter holds your biggest sales, so it often holds your biggest GST bill.

The cash conversion cycle guide shows how to measure that gap in days. The peak-season version is simply the same cycle, stretched and bigger.

What does the ACCC look for in Black Friday claims?

Pricing claims are an ACCC compliance priority, and in April 2026 the regulator said it was investigating retailers over Black Friday claims, including countdown timers that kept running past the stated end, “sitewide” offers with exclusions buried in fine print, and “up to” discounts where hardly anything qualified.

For a small store, the practical version is short:

• “Was” prices should be prices you genuinely charged, not ones you lifted in October.
• If thin-margin lines are excluded, don’t call it sitewide.
• “Up to 40% off” should mean a meaningful range is really at 40%.
• If a timer says the sale ends at midnight, end it at midnight.

Honest offers are also easier to model, because you know exactly which products carry which discount.

A worked example: choosing between 30% off and a bundle

Illustrative only — a made-up store. A skincare brand sells about 400 orders in a normal November fortnight, each leaving $37.63. That’s roughly $15,050 in contribution.

The founder is weighing up 30% off sitewide. To earn the same $15,050 at $16.29 per order, the brand needs about 924 orders — 2.3 times normal. Past sale data shows the best-ever week was 1.8 times normal. The 30% offer would probably shrink contribution while doubling the workload and the stock bill.

The founder models a bundle offer and a gift with purchase instead. If 40% of customers take the bundle, the average contribution per order rises, and far fewer extra orders to come out ahead. The brand buys stock for 1.6 times normal volume, holds some cash back for January returns, and diarises the February BAS.

Nothing about this is clever. It’s just the maths done in October rather than December.

A checklist before you lock in your discount

• I know my contribution per order at full price, after GST, landed cost, shipping and fees.
• I’ve recalculated it at each discount I’m considering.
• The orders-needed multiple is realistic against my best past sale.
• My break-even ROAS at the sale price is achievable at peak ad costs.
• My fee line reflects my real processor statement, with no surcharge.
• I’ve tested a bundle, threshold or gift against a straight percentage.
• My claims are accurate: real was-prices, clear exclusions, honest timers.
• I’ve mapped the cash from October stock to the February BAS.

Got the numbers right but short on stock money?

If your sale-price contribution holds up and your data says the volume is there, the constraint is usually cash: stock in October and ads in November, well before the payouts arrive. That’s exactly the gap peak-season stock funding and a line of credit for online sellers are built for.

Here’s how it works with us. The enquiry takes about a minute, and there’s no credit check when you first enquire. Your details go to one specialist who understands online stores. We don’t send them out to a pile of lenders, so your phone won’t light up with strangers. A real person reads your situation and calls you to talk through what fits. Please fill in the form accurately — monthly revenue, months trading and whether you own property — so we can match the right option the first time. Bring your Black Friday maths along; it helps.

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