Discount margin, a fundamental metric in pricing strategies, refers to the percentage difference between the original price and the discounted price of a product or service. For instance, a product initially priced at $100 sold at a discounted price of $80 has a discount margin of 20%.
Calculating discount margin is essential for businesses as it helps optimize pricing, maximize revenue, and enhance customer satisfaction. It provides insights into the effectiveness of promotional campaigns and supports informed decision-making regarding future pricing strategies. Historically, the concept of discount margin has evolved alongside retail industry practices, becoming increasingly relevant in the e-commerce era.