My Customer Pays ₹699 but I Offer a 10% Discount Frequently — Should I Calculate My Margins Using MRP or the Average Amount Customers Actually Pay?

Two prices, and only one of them is money

There are two numbers on every order you ship. The first is the price on the listing — your ₹699.00. The second is the amount that settles into your account after the code has been applied. When you discount rarely, the two are close enough that nobody notices the gap. When you discount often, as your question says you do, the gap stops being rounding and becomes the difference between a business you think you have and the one you actually have.

The name for the second number is average selling price, usually shortened to ASP, and it is the correct denominator for every margin percentage you will ever quote. Your ₹699.00 still has a job: it is the anchor customers see, it is what a discount is measured against, and it is what you print on a gift card. It is simply not what you earned. The arithmetic that connects the two is one line: ASP is the list price less the discount, weighted by the share of orders that take the discount.

On your figures the discount is worth ₹69.90 — 10% of ₹699.00 — and the only thing left to establish is how often it is taken. That share is the variable most makers never measure, and it is the one this page is really about. Guessing it low is comfortable. It is also the single most common reason a candle brand believes it has a margin it does not have.

Read the first and last rows together. Between them sits ₹69.90 of price and 4.12 percentage points of margin — and a business that reports the top row while living in the bottom one will keep wondering why a 62.91% margin does not feel like a 62.91% margin at the end of the month. The middle rows are the interesting ones, because that is where most Indian D2C candle brands actually sit: a festive code in October, a welcome code for first orders, a friends-and-family code that spread further than intended, and suddenly two orders in five are discounted.

The cost side does not move, and here it is

The reason ASP is worth the trouble is that the other side of the calculation is rigid. A discounted candle uses exactly the same wax, the same oil, the same vessel and the same wick as a full-price one. So the honest way to see what your discount does is to hold materials still at a real, checkable number and let only the price move. Here is that number, built on live CSI stock so you can price it yourself rather than take it from this page.

The costing unit is the series convention and it is worth stating in full: 200 g of wax plus 16 g of fragrance oil at 8% of wax weight, so 216 g goes into the jar. That is the reading carried through every figure on this page. The wax is Luxury Soy Wax Chunks, whose page states a maximum load of 13% of total wax weight; the oil is Jasmine Fragrance Oil, whose page states soy use up to 10% of total wax weight and a flash point of 185°C with 0% vanillin. Where a wax ceiling and an oil range differ the lower one governs, so 10% is your ceiling on this pairing and 8% sits comfortably under it.

Two honest notes on that stack before it gets used as a benchmark. The first is that ₹259.27 buys the four lines CSI sells and nothing else; your label, box, ribbon, outbound courier, gateway fee, advertising and hours are real costs that are not in it, and they are paid out of contribution. The second is that the vessel and the wick together are ₹76.70, which is more than the fragrance — a reminder that when a discount makes you hunt for savings, the wax line is rarely where the money is.

Where the 10% actually lands

This is the part that changes behaviour, so it is worth being slow about. A discount is quoted against the price, which is the biggest number in the calculation, and it is paid out of contribution, which is a much smaller one. The ratio between those two is the true cost of any discount, and it is fixed by your cost structure, not by the size of the code.

On your ₹699.00 with a ₹259.27 materials stack, contribution at full price is ₹439.73. Hand back ₹69.90 and you have handed back 15.90% of it. A 10% code is a sixth of your contribution, not a tenth. That multiple — call it the leverage of the discount — is simply the price divided by the contribution, and it is why brands with thin margins cannot afford the codes that brands with fat ones run all year.

There is a second, quieter effect in the same table. At half penetration your margin reads 60.96% instead of 62.91% — under two points, which sounds like nothing. But a two-point margin error compounds through every decision that uses margin: what you can afford to spend acquiring a customer, whether a marketplace commission is survivable, how much of a festive push you can fund. Reporting on ASP does not change your business. It changes the quality of every decision you make about it.

Measuring your own ASP in one sitting

One refinement worth adding once the basic version is running. If you use more than one code — a welcome discount and a festive one at different depths — do not try to model them separately at first. The single division in step three already captures every code, every size and every leak, because it only looks at money and units. Split it by code later, when you want to know which one is earning its place.

What ASP still does not tell you

Moving to ASP fixes the price side of the calculation. It fixes nothing else, and it is worth being explicit about that so the improvement does not turn into false confidence. Contribution of ₹404.78 at half penetration is what remains after materials and before everything else, and everything else is a long list. CSI sells wax, fragrance, vessels and wicks, so those four lines can be priced from a live store. Nothing below is a CSI product, which means no honest figure for it exists on this page. Put your own numbers in and total the sheet as materials from CSI plus your own costs.

Two of those rows deserve a sentence. Returns and breakage behave exactly like a discount — a replacement candle shipped free is a 100% discount on that unit, and it belongs in your realised-price thinking rather than in a separate mental box. Your labour is the line that stays blank longest, and leaving it blank is a decision rather than a neutral act. A candle that carries ₹259.27 of materials and forty minutes of your evening is not a ₹259.27 candle, whatever ASP you sell it at.

The same arithmetic, from the buying side

There is a neat symmetry worth using here. When you discount, your realised price falls below your list price. When you buy on a published code, your realised cost falls below the listed price — and the effect on contribution is exactly as leveraged in your favour as your own discount is against you. CSI publishes spend-based codes: HAPPY5 at 5% over ₹5,000, BIZWIZ8 at 8% over ₹12,000 and YAY10 at 10% over ₹20,000. Those are order-value discounts, not quantity breaks — they depend on what the whole basket comes to, not on how large a pack you choose.

Be precise about what that does and does not mean, because the distinction matters when you are costing. The per-kilogram and per-gram rates on this page are the listed ones. Luxury Soy Wax Chunks runs ₹598.00 a kilogram in the 500 g pack, ₹599.00 in the 1 kg and 5 kg packs and ₹599.90 in the 10 kg pack, so the larger packs are not cheaper per kilogram on this grade — what the big pack buys you is fewer parcels and fewer reorders, not a lower rate. Jasmine Fragrance Oil runs ₹6.87 a gram at 15 gm, ₹4.60 at 50 gm, ₹4.30 at 100 gm and ₹3.92 at both 500 gm and 1 kg; two 500 gm packs come to ₹3,922.00 against ₹3,923.00 for the single kilogram, which is ₹1.00 in favour of the pair and is worth knowing only so that you check the ladder rather than assume it.

The wider point closes the loop with your own question. Both sides of your business now have a list price and a realised price, and in both cases only the realised one is money. Measure your selling side on ASP, measure your buying side on what you actually paid per kilogram and per gram after any code, and the margin between the two is finally a number you can defend to an accountant, a lender or yourself at the end of a long festive week.

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