By Ashish Rai, CEO, Purple Circle · October 2026 · 9 min read

A Diwali sale only makes money if the extra orders cover the discount, the higher festive ad costs and the higher festive RTO, and a flat discount usually needs far more extra orders than founders expect. At a 55% margin after delivery costs, a 30% discount needs more than twice the orders just to stand still, before ads. In the example below, a “flat 30% off” sale doubles orders and loses ₹2.25 lakh. A “buy 2 for ₹2,499” offer on the same budget makes ₹4.43 lakh.

Every October, the same movie plays in D2C. The founder announces “Flat 30% off”. The team cheers. Orders double. The warehouse runs out of tape. Someone posts a screenshot of the Shopify dashboard on LinkedIn.

Then November ends, the RTO parcels come home like relatives who stayed too long, and the bank balance is somehow lower than it was in September.

How many extra orders does a discount need?

Before festive costs or ads, here’s the number of extra orders a discount needs just to make the same profit as before. This uses a CM2 margin of about 55%, meaning what’s left after product, shipping, fees, RTO and returns. If those terms are new, start with CM1 and CM2 for apparel brands.

Read that last bar again. A 30% discount needs more than double the orders just to make the same money you’d make without a sale. Not more money. The same money. And that’s before Meta raises your rent for the season.

Meet the Diwali founders

Same ethnic wear brand, regular price ₹1,499, product cost ₹450. In a normal month it spends ₹3 lakh on Meta. For Diwali, it doubles the budget to ₹6 lakh. We assume festive ad costs run about 40% higher. Festive RTO is higher on discount-driven COD orders. For reference, Unicommerce reported RTO peaking at 39.2% across D2C brands in November 2025. This is an illustrative example, not client data, and prices are net of GST.

The Sale-Everything Founder had the best Diwali on the dashboard. Orders placed went up 114%. Every order sold at ₹1,049, the festive COD crowd pushed RTO to 32%, and Meta charged more for every buyer. Each delivered order lost ₹216. Their courier partner loved them. Their CA did not.

The Gift Giver kept the price, added a ₹120 gift above ₹1,499 and 5% off for prepaid. RTO fell to 20%, which is good. But doubling the budget into festive ad prices with only a modest lift in conversion left a thin ₹69 per order. They doubled the spend and made less than in a normal month.

The Bundle Boss offered “buy 2 for ₹2,499”, about 17% off two kurtas. Fewer orders than the flat sale, but each one was worth ₹2,499, so shipping and ad cost were spread over a bigger order. ₹548 profit per order and ₹4.43 lakh for the month.

The math, per delivered order

Two things jump out. First, the flat discount wiped out CM2 before ads even showed up: ₹361 left from a ₹1,049 order. Second, the bundle’s ad cost per order was the highest of all, and it still won by miles. That’s what order value does. It’s the same lesson as why small orders lose money, just with fireworks.

Why flat festive discounts hurt the most

Diwali offers that protect your profit

Diwali sale mistakes, ranked by how much they hurt

FAQ

How do I know if a Diwali discount will make money?

Work out how many extra orders the discount needs using CM2 % ÷ (CM2 % − discount %) − 1, then add festive ad costs and festive RTO. If you can’t realistically get that many more orders, the discount will lose money.

Is a flat discount or a bundle better for a festive sale?

For most apparel brands, a bundle. It gives customers a real saving while raising order value, so shipping, RTO and ad costs are spread over a bigger order.

How much more do ads cost during Diwali?

It varies by category and year, but festive competition reliably pushes costs up. Plan your sale assuming noticeably higher costs per order than a normal month, and recalculate your break-even ROAS for it.

Should I offer COD during a Diwali sale?

Selectively. Use prepaid incentives, a COD fee on sale orders, and verification before dispatch for high-risk orders, rather than switching COD off completely.

When should I measure if my festive sale worked?

Two to three weeks after the sale ends, once RTO and returns have come back. Measure delivered profit after ads, not orders placed.

— Ashish Rai, CEO, Purple Circle