If your product is great, growth comes down to one question:
How do you get it into as many relevant hands as possible?
Most brands answer that question with the two most expensive tools they have:
20% off and Free Plus Shipping Offers.
Both feel generous. Both quietly destroy contribution margin.
This issue is about the math behind better answers:
Deep Dive | Why 20% off is probably your worst offer
Almost every great offer in history is built on the same mechanism:
A big gap between the perceived value of something and what it actually costs you to fulfill it.
The classic example is Dropbox at launch.
Refer a friend, get free storage forever. The storage felt like real money to you. It cost Dropbox close to nothing to provide.
That gap is the whole game. And most eCom brands ignore it completely.
The default offer in eCom is 20% off.
Let's do the math on that.
Say you sell at an AOV of €100:
Revenue: €100
- Taxes: €20
- COGS: €30
= CM1: €50
Now you run 20% off. Revenue drops to €80, taxes scale down, COGS stay the same:
Revenue: €80
- Taxes: €16
- COGS: €30
= CM1: €34
You just gave away a third of your contribution margin.
Now run the alternative:
Instead of €20 off, you give a free gift worth €30.
Same COGS rate of 30%, so that gift costs you €9 to fulfill:
Revenue: €100
- Taxes: €20
- COGS: €30 - €9
= CM1: €41
That is 20% more CM1 than the discount option.
Base Scenario | 20% off Scenario | Free Gift Scenario | |
Revenue | €100 | €80 | €100 |
- Taxes | €20 | €16 | €20 |
- COGS | €30 | €30 | €39 |
= CM1 | €50 | €34 | €41 |
And here is the part most brands miss:
The customer gets the better deal too.
€30 of extra value instead of €20 off.
Higher perceived value for them, more margin for you.
This is not a trick. It's just doing the math before you design the offer.
What to do with this:
Run the CM1 math on every offer before it goes live. Not CVR, not revenue, but contribution margin per order.
Look through your catalog for gift candidates: products with high perceived value and low COGS. That gap is your offer budget.
Use spend thresholds ("spend €X, get a gift worth €40"). The perceived value is €40, your cost might be €5-10, and you push AOV up at the same time.
If you test gift vs. discount head to head, compare CM per order, not just conversion rate. A discount that converts slightly better can still lose badly on margin.
Deep-Dive | How to give your product away - to the right people
The offer math above is for people already standing at your door.
But the same logic applies one step earlier. To the people who have never tried your product at all.
Because if your product is great, people will buy it again.
Product is the biggest retention driver there is.
Which means growth really comes down to one question:
How do you get your product into as many relevant hands as possible?
The word doing the heavy lifting here is relevant.
Getting people to pay for your product is the best filter you have.
Paying customers are, by definition, the right fit. That's why paid acquisition should stay your foundation.
But paying customers are not always the fastest way to scale trial.
And the default shortcut, a Free Plus Shipping Offer (the actual product is free, the customer only pays for shipping), is usually the wrong one:
It attracts deal hunters, not right-fit customers.
You pay fulfillment and delivery on every single unit.
The underrated alternative: real-life sampling.
Go where your target customers actually are - the gym, the event, the retail shelf - and hand them the product.
The operational effort is real for sure.
But run the same math as in the offer section:
The cost per relevant person reached is often far lower than a free plus shipping offer, because there is no pick, pack and delivery to pay for.
You are again exploiting the gap between what the experience is worth to them and what it costs you to deliver it.
And if you already have retail distribution at scale, sampling gets even more powerful:
More right-fit people try the product, like it, and buy it again later.
So, what to take away from this:
Keep paid acquisition as your quality filter - it tells you who the right people are.
Be very careful with free plus shipping. Cheap-looking trial that attracts the wrong crowd is expensive twice.
Map where your ICP physically gathers and sample there. Compare the cost per person against your free plus shipping math.
If you're in retail at scale, treat sampling as a serious channel, not an afterthought.
Measure both levers the same way: cost per relevant hand reached, then repeat rate.
Offers and distribution look like two different topics. But they run on one principle:
Find the gap between perceived value and your actual cost to fulfill it
Then spend that gap, not your margin.
What's the best-performing offer you have ever run? Genuinely curious what's working out there.
Community Events | Cooking in Munich, Bingo in Cologne, …
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Thanks for reading.
I’ve spent the last decade figuring out what’s actually working in eCommerce, and what it’s really worth in profit.
Coming from building an 8-figure and a 9-figure eCom brand myself, plus now working with hundreds of brands at Klar. And sharing the insights, frameworks, and hard-earned lessons that help you build a better and more profitable eCom business in this newsletter.
If there’s a question you’d like me to unpack next, just reply to this email. I read every response.
Have a great week.
Max ✌️
PS. If you missed any past issues, you can catch up on all of them here.
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