The largest discount you can afford is equal to your profit margin. If you keep 35 percent of each sale after all costs, a 35 percent discount takes you to exactly zero, and anything deeper costs you money on every order.
The rule in one line
Once your discount percentage passes your margin percentage, you are paying customers to take your stock. That is the number to check before joining any platform-wide sale event, and it is the number most sellers have never actually calculated.
The Discount Calculator shows the sale price, your profit at that price, and the deepest discount you can offer before it turns negative.
Fees make it worse than it looks
Marketplace fees are charged on the discounted price, which sounds like good news and is not. Your fee falls a little, but your margin falls far more, because the fee is a percentage of a smaller number while your product cost has not moved at all.
Work an example. A $40 item that cost you $18, sold on eBay at roughly 13.6 percent plus $0.35, leaves about $16.21. That is a 41 percent margin. Apply a 30 percent discount and the sale price becomes $28. Fees drop to about $4.16, but your profit is now $5.84, a 21 percent margin. The discount cost you half your profit, not 30 percent of it.
Better than discounting
Free shipping. Usually converts better than an equivalent discount because perceived value is high while the real cost is fixed and known. Just remember the fee applies to the higher price when the buyer pays shipping separately, so model both.
Bundles. Raise average order value and spread shipping across more items, which improves margin rather than eroding it.
Threshold offers. Ten dollars off orders over fifty moves basket size instead of simply reducing what you earn on a sale you were going to make anyway.
When deep discounting is still right
Clearing stock that is about to cost you storage fees. Ending a product line. Building initial reviews on a launch. All legitimate, provided you know what the sale costs and have decided the trade is worth it.
Before your next sale event, run your three best sellers through the calculator and write the maximum discount for each on a note. That one exercise prevents most of the damage.