Every November the same conversation happens in hundreds of footwear stores. Someone opens the spreadsheet, looks at what the competition is advertising, and decides the store will run 20 per cent off everything. It is simple to communicate and simple to set up. It is also the fastest way to destroy your Black Friday margin on the cheapest products while telling yourself the week went well because revenue doubled.
Margin during Black Friday is not a percentage you choose. It is the result of a calculation you run per category, and the answer is different for a cap, a clog, a core sneaker and a lined boot. This article gives you the framework, with a worked example you can replace with your own numbers, and shows why one identical discount across the catalogue hurts the low-price categories first.
The costs that decide your Black Friday margin
Gross margin, selling price minus purchase price, is the number most retailers look at when they set a discount. It is the wrong number. What you keep from one sale is the unit contribution, and four costs reduce it that do not move when you cut the price.
Landed cost is what the pair cost you delivered to your shelf. With a supplier that ships free on every order, as Oversoles does, it is close to the invoice price. Marketplace or platform commission is a percentage of the selling price, plus payment processing. It is the only cost that falls a little when you discount. Outbound logistics per parcel covers the courier, packaging and picking time, a fixed amount per order, with peak surcharges added by carriers in Q4. Expected return cost is your return rate for the category multiplied by what a return costs you: the return leg, inspection and repackaging.
Only one of these costs scales down with price. Landed cost, parcel cost and return cost stay exactly where they were, so every euro of discount comes straight out of contribution. Paid traffic during Black Friday week is also the most expensive of the year, which is one more reason to protect what each order earns.
A worked example across four categories
The table uses illustrative figures, net of VAT, for a store selling through a marketplace with 15 per cent commission and 1.5 per cent payment processing. They are not Oversoles prices and not market averages, only round numbers that make the arithmetic easy to follow. Replace each one with your own.
| Category | Net selling price | Landed cost | Parcel cost | Return rate x cost | Contribution at full price |
|---|---|---|---|---|---|
| Cap | €30 | €15 | €5 | 5% x €8 | €4.65 |
| Clog | €45 | €24 | €6 | 8% x €9 | €6.86 |
| Core sneaker | €120 | €65 | €7 | 12% x €12 | €26.76 |
| Lined boot | €160 | €95 | €9 | 15% x €15 | €27.35 |
Contribution is the selling price minus landed cost, minus 16.5 per cent for commission and payment, minus the parcel cost, minus the expected return cost. On these numbers the cap keeps 15.5 per cent of its price, the clog 15.2 per cent, the core sneaker 22.3 per cent and the boot 17.1 per cent. The categories do not start from the same place, so they cannot carry the same discount.
What a flat 20 per cent does to each line
Apply the same 20 per cent to every category. Each euro of discount costs you 83.5 cents of contribution, because commission falls slightly with the price.
| Category | At full price | At 20% off | Maximum discount before loss | Discount that keeps half the contribution |
|---|---|---|---|---|
| Cap | €4.65 | minus €0.36 | 18.6% | 9.3% |
| Clog | €6.86 | minus €0.66 | 18.2% | 9.1% |
| Core sneaker | €26.76 | €6.72 | 26.7% | 13.4% |
| Lined boot | €27.35 | €0.63 | 20.5% | 10.2% |
The same promotion produces three outcomes. The cap and the clog lose money on every unit. The lined boot ships for 63 cents of contribution, which one return wipes out. Only the core sneaker, a model like the Nike Air Force 1 Low '07 White, still earns something meaningful. A store running 20 per cent off everything is paying customers to take its accessories and clogs, and funding the loss from the sneaker line.
The breakeven discount should never be your target. The useful figure is the last column: the discount that leaves half of normal contribution. On these numbers it sits between 9 and 13 per cent, a realistic ceiling for a campaign that should be profitable rather than just busy.
Why low-price categories break first
The reason is the parcel. A €5 courier cost is 17 per cent of a €30 cap and less than 6 per cent of a €120 sneaker. Sold alone, a cap like the New Era The League Chicago Bulls spends most of its contribution on shipping before any discount is applied. The same is true of beanies, kids sandals and entry clogs such as the Crocs Classic Clog: exactly the products retailers like to push hard because the discounted price looks good in an advert.
There is one situation where the low-price category becomes very profitable. When the cap travels in the same parcel as a pair of sneakers, its parcel cost is zero, and in the example above its contribution jumps from €4.65 to €9.65. A cap sold as an add-on can carry a discount that would be ruinous on a cap sold alone. That is why bundles and add-to-order offers are the right Black Friday mechanic for accessories.
How to set the discount ceiling per category
The method takes an afternoon and you only need it once per season. Work at category level first, then adjust single lines where the landed cost is far from the category average.
- Pull last season's return rate per category. Not the store average. Lined footwear with a fit deviation returns more than anything else.
- Use your real November parcel cost. Take the peak rate, not the spring contract rate, since carriers add demand surcharges in Q4.
- Fill in the contribution formula for each category with your own selling price, landed cost, commission, parcel and return cost.
- Set the floor contribution you accept. Half of normal contribution is a sensible default, decided in advance.
- Derive the maximum discount from the floor and write it down. When a competitor goes deeper during the week, this number is your answer.
If you sell only through your own shop, remove the marketplace commission. Your ceilings rise, but the shape does not change: low-price categories still tolerate the smallest discounts.
Discount structures that protect contribution
Once you know the ceiling per category, you need a campaign that is not one flat number and still reads clearly. Three structures work for footwear and apparel stores.
Tiered discount by category. 15 per cent on core sneakers, 10 per cent on boots, nothing on accessories sold alone. Honest and easy to put on a banner. Give visual priority to the categories where your discount is strongest.
Spend thresholds. 10 per cent from €100, 15 per cent from €200. A threshold pushes a second item into the basket and spreads the parcel cost across more products, which attacks the problem in the tables directly.
Add-on pricing. The accessory is discounted only when added to an order with footwear. This turns the cap into a profitable line and raises average order value.
What does not work is a deep discount on a few hero products with no plan for what that traffic buys next. Read the results line by line afterwards, using the method in how to read three weeks of sales before you reorder, not only total revenue for the week.
The purchase price is where your Black Friday margin is really decided
Everything above treats landed cost as fixed. It is fixed during Black Friday week. It is not fixed in September and October, when the stock is bought. Every euro saved on purchase price is a euro of discount you can give later without touching the floor, and on a €120 sneaker a few euros is the difference between a 10 and a 13 per cent ceiling.
That is the practical case for buying campaign stock early from a supplier with transparent pricing, free shipping and dispatch in a maximum of 72 hours, rather than topping up at the last minute from whoever has stock. It also matters which products you push: steady sellers with low return rates tolerate a campaign far better than seasonal lines with uncertain demand. The operational side of running the peak, including stock accuracy and delivery promises, is covered in why retailers must prepare for Q4 now.
Key takeaways
- Calculate unit contribution per category, including peak parcel cost and expected returns, not gross margin.
- Never apply one discount to the whole catalogue: low-price categories break first because shipping is a large share of their price.
- Use half of normal contribution as the floor and derive each category's maximum discount from it.
- Discount accessories only as add-ons to footwear orders, where their parcel cost disappears.
- Prefer spend thresholds and tiered discounts over a flat percentage, and decide everything before the campaign opens.
Lines that carry a Black Friday campaign
The framework works best on lines with steady demand and predictable returns, so the discount you set in advance holds through the week. These three cover the roles a profitable campaign needs: a sneaker that carries the headline, an accessory that rides along in the same parcel, and a winter line that lifts the basket.
Nike Air Force 1 Low '07 White
The clean white leather Air Force 1 is the line with the most room for a discount in the example above, because its contribution starts high and its demand does not depend on the season. Use it as the headline of a tiered offer, within the ceiling you calculated, and let it bring traffic that buys accessories next to it.
New Era The League Chicago Bulls
An adjustable cap with a team every customer recognises. Sold alone it should carry little or no discount. Offered as an add-on to a sneaker order, it ships at no extra parcel cost and becomes one of the most profitable lines of the week.
UGG Classic Ultra Mini Boot Chestnut
The short sheepskin boot is the winter line that lifts a basket over a spend threshold. Its return cost is higher than a sneaker's, so keep its discount closer to the 10 per cent ceiling and publish clear sizing guidance on the product page.
All three are in the sneakers collection and the full Oversoles catalogue, with free shipping on every order across Europe.
