Discount Engine

Discount Engine

Overview

A discount engine evaluates promotions against a cart and applies the right discounts in the right order. Every major e-commerce platform has one built in — you should configure the platform's native system before considering custom code. This skill covers how to set up complex discount logic (percentage off, fixed amount, BOGO, tiered thresholds, conditional rules) on each platform, and when to use apps or plugins to extend native capabilities.

When to Use This Skill

• When building a promotions system for a new e-commerce store
• When adding coupon code support to an existing checkout flow
• When implementing tiered pricing (e.g., buy 3+ get 10% off, buy 10+ get 20% off)
• When creating automatic discounts that apply based on cart conditions
• When you need BOGO, bundle, or gift-with-purchase promotions

Core Instructions

Step 1: Determine the merchant's platform and choose the right tool

Step 2: Set up automatic discounts and BOGO on your platform

Shopify

Automatic discounts (no code required):

1. Go to Discounts → Create discount → Amount off products (or Amount off order)
2. Toggle No discount code (makes it automatic — applies without a code)
3. Set the discount value and conditions
4. Under Minimum purchase requirements: set a minimum quantity or subtotal to trigger the discount
5. Set the Active dates — automatic discounts apply to all eligible carts during this window

BOGO (Buy X Get Y):

1. Go to Discounts → Create discount → Buy X get Y
2. Set the Customer buys section: quantity and which products/collections qualify
3. Set the Customer gets section: quantity of free/discounted items and which products
4. Set the discount percentage (100% = free)
5. Set a Maximum uses limit if needed

Tiered quantity discounts (Shopify): Native Shopify does not support tiered quantity breaks (e.g., 1–4 units = full price, 5–9 = 10% off, 10+ = 20% off) without an app. Options:

• Bold Discounts (App Store, ~$20/month): visual interface for tiered pricing rules
• Wholesale Club (App Store): adds a wholesale/tiered pricing layer for B2B
• Shopify Plus + Shopify Functions: write a Discount Function in JavaScript that applies the correct tier based on cart line quantities

Stacking rules: In Shopify, each discount can be configured to combine with others:

1. Edit a discount → scroll to Combinations
2. Toggle which discount types it can be combined with: product discounts, order discounts, shipping discounts

WooCommerce

WooCommerce core coupons cover single-code, percentage, and fixed-amount discounts. For automatic, rule-based, and BOGO discounts, use the Dynamic Pricing & Discounts plugin.

Installing Dynamic Pricing:

1. Purchase and install YITH WooCommerce Dynamic Pricing & Discounts or the WooCommerce-branded Dynamic Pricing extension
2. Go to WooCommerce → Dynamic Pricing → Add Rule

Creating a tiered quantity rule:

1. Set rule type to Product Pricing or Category Pricing
2. Add pricing tiers:
   • From 1 to 4 quantity: 0% off (full price)
   • From 5 to 9: 10% off
   • From 10 to 24: 20% off
   • From 25 and above: 30% off
3. Set which products or categories this applies to
4. Save and publish

BOGO in WooCommerce:

1. In Dynamic Pricing, create a new rule of type Cart Pricing
2. Set the condition: "When cart contains X of [product]"
3. Set the action: "Add Y of [product] at [0% of regular price]"
4. Or use WooCommerce Smart Coupons for gift-with-purchase

Preventing unintended stacking: In WooCommerce core coupons, tick Individual use only to prevent a coupon from combining with other coupons. For automatic rules in Dynamic Pricing, each rule has a "Stops further rules" option that prevents lower-priority rules from applying.

BigCommerce

BigCommerce has a native Promotions system that covers most discount scenarios.

1. Go to Marketing → Promotions → Create promotion
2. Set the Promotion type: cart-level discount, item-level discount, free shipping, free item, BOGO
3. Configure Conditions:
   • Minimum cart subtotal
   • Specific products or categories included/excluded
   • Customer groups (for B2B or segment-specific pricing)
4. Set Actions: the discount amount and which items it applies to
5. Set Coupon (optional): attach a code to require manual application, or leave blank for automatic
6. Set Rules for stacking: BigCommerce allows defining whether a promotion can stack with other promotions

Tiered quantity pricing on BigCommerce: Use the Price Lists feature (Plus plan and above):

1. Go to Products → Price Lists
2. Create a price list with explicit per-unit prices at different quantity thresholds
3. Assign the price list to a customer group
4. Customers in that group automatically see the tiered prices

Custom / Headless

For custom storefronts, the discount engine evaluates applicable discounts and allocates them to cart lines. The key principles are: evaluate server-side, apply in priority order, and enforce stacking rules.

interface Discount {
  id: string;
  type: 'percentage' | 'fixed_amount' | 'bogo' | 'free_shipping';
  value: number;        // percentage (0-100) or cents
  target: 'order' | 'line_item' | 'shipping';
  isStackable: boolean;
  minCartCents?: number;
  minQuantity?: number;
  entitledProductIds?: string[];
  excludedProductIds?: string[];
  startsAt: Date;
  endsAt?: Date;
}

interface CartLine {
  id: string;
  productId: string;
  quantity: number;
  unitPriceCents: number;
}

function evaluateDiscounts(
  cart: { lines: CartLine[]; subtotalCents: number },
  discounts: Discount[]
): { discountId: string; amountCents: number; affectedLineIds: string[] }[] {
  const now = new Date();
  const eligible = discounts.filter(d =>
    d.startsAt <= now && (!d.endsAt || d.endsAt > now)
  );

  // Sort: non-stackable first, then higher-value
  const sorted = [...eligible].sort((a, b) => (a.isStackable ? 1 : -1) - (b.isStackable ? 1 : -1));

  const applications: { discountId: string; amountCents: number; affectedLineIds: string[] }[] = [];
  let nonStackableApplied = false;

  for (const discount of sorted) {
    if (!discount.isStackable && nonStackableApplied) continue;

    // Check minimum cart value
    if (discount.minCartCents && cart.subtotalCents < discount.minCartCents) continue;

    const eligibleLines = cart.lines.filter(line =>
      (!discount.entitledProductIds || discount.entitledProductIds.includes(line.productId)) &&
      (!discount.excludedProductIds || !discount.excludedProductIds.includes(line.productId))
    );
    if (eligibleLines.length === 0) continue;

    let amountCents = 0;
    if (discount.type === 'percentage') {
      amountCents = Math.round(
        eligibleLines.reduce((s, l) => s + l.unitPriceCents * l.quantity, 0) * discount.value / 100
      );
    } else if (discount.type === 'fixed_amount') {
      amountCents = Math.min(discount.value, cart.subtotalCents);
    } else if (discount.type === 'bogo') {
      const buyQty = discount.minQuantity ?? 1;
      for (const line of eligibleLines) {
        const freeItems = Math.floor(line.quantity / (buyQty + discount.value)) * discount.value;
        amountCents += freeItems * line.unitPriceCents;
      }
    }

    if (amountCents > 0) {
      applications.push({ discountId: discount.id, amountCents, affectedLineIds: eligibleLines.map(l => l.id) });
      if (!discount.isStackable) nonStackableApplied = true;
    }
  }

  return applications;
}

Always re-run this evaluation at order creation, not just at cart-add time, to catch race conditions and expired discounts.

Best Practices

• Always calculate discounts server-side — never trust client-submitted discount amounts; recalculate at checkout
• Define stacking rules explicitly — decide upfront whether multiple discounts can combine and document the policy for your merchandising team
• Cap maximum discount amounts — for percentage discounts, set a maximum dollar cap to prevent runaway promotions
• Exclude sale items from additional promotions — prevent compounding discounts from destroying margins; Shopify and WooCommerce both support "exclude sale items" rules
• Test rules on staging before activating — particularly important for automatic discounts that apply to all eligible customers without requiring a code
• Log every discount application — record discount ID, customer, order, and amount for audit trails and promotion ROI reporting
• Set clear end dates — automatic discounts without an end date continue applying indefinitely; always set an expiry

Common Pitfalls

Related Skills

• @stripe-integration
• @checkout-flow-optimization
• @coupon-management
• @price-rules-engine
• @volume-pricing