The Q4 promo calendar is getting built right now.
Somebody put a number in a cell. Twenty-five percent, probably. Maybe thirty.
It came from what you ran last year, or from what a competitor sent on November 20, and everyone panicked.
It did not come from your floor.
Most brands don't have one. They have a gross margin number and a feeling.
The discount isn't the cost. The volume is.
Take a $68 unit. Landed cost of $19. Another $6.50 to ship it, pick it, process the payment, and eat the returns.
That's $42.50 of contribution, or 62.5% of the price.
Run 20% off and the price drops $13.60. Contribution drops to $28.90.
You gave up 20% of price and 32% of contribution.
Which means to end the promo with the same gross profit you had before it, you need to sell 1.47x the units.
At 30% off, 1.92x.
At 40% off, 2.78x.
Nobody plans for 2.78x. They plan for "a good weekend."
The floor moves in November and the discount doesn't
Here's the part that gets brands.
At a $22 CAC, that same product has $13.70 of headroom at 10% off. $6.90 at 20%. Ten cents at 30%.
At 30% off you are exactly at break-even on acquisition. Not profitable. Break-even.
Now run the auction forward. Your November CAC comes in at $28, which is a normal Q4 lift.
The 30% promo you penciled in August now loses $5.90 on every customer it brings in.
The inventory didn't change. The price didn't change. The discount didn't change.
The only thing that moved was the cost of the customer, and you set the depth eleven weeks before you knew it.
Set the floor first, then build the calendar
Three numbers, in this order.
1) Your contribution per unit at full price. Not gross margin. Include shipping, pick and pack, processing, and returns. The number is always lower than the one in the deck.
2) Your maximum depth at last year's actual holiday CAC. Not today's CAC. Pull November and December by channel and re-run it. Whatever depth still clears is your ceiling for the season.
3) The volume multiple each depth requires. If a depth needs more than 1.5x the units to hold gross profit flat, it isn't a promotion. It's a liquidation you're describing optimistically.
Write those down before anyone opens the calendar.
Then when the competitor's email lands on November 20, you already know whether you can answer it.
The competitor's discount is not information about your business.
Your floor is. Set it in September, when it's still arithmetic, instead of in November, when it's a reaction.
Discount Margin Matrix. Four inputs, four discount depths, and it tells you where your floor is and what volume each depth actually demands.
Secondary: → [Book a call] for a full Q4 scenario model with channel mix, return rates, and your January 1 carryover position.
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