How to Create a Discount Code on Shopify

Table of Contents

1. Introduction
2. The Technical Steps: How to Create Your First Discount Code
3. Foundations First: Preparing Your Store for Discounts
4. Clarify the Why: What is the Goal of This Discount?
5. Margin and Operations Check: Protecting Your Profits
6. Moving Beyond Codes: The "Bundle with Intention" Strategy
7. Scenarios: Real-World Discount Logic
8. Performance and Measurement: What to Track
9. Trust and Compliance Guardrails
10. Summary: A Checklist for Intentional Discounting
11. FAQ

Introduction

Every merchant eventually faces the same challenge: you have traffic, and you have great products, but getting a shopper to take that final step toward the checkout button requires a little extra motivation. For many Shopify founders, the first tool they reach for is the discount code. Whether it is a "Welcome" offer for new subscribers or a seasonal flash sale, knowing how to do a discount code on Shopify is a fundamental skill for running a modern online store.

This guide is designed for new Shopify founders getting their feet wet, as well as growing Direct-to-Consumer (DTC) brands looking to refine their promotion strategy. We will move beyond the basic "how-to" clicks and explore how to use discounts as a strategic lever rather than a margin-draining habit.

At MBC Bundles, we believe that discounts work best when they are part of a larger, intentional system. Our approach centers on a specific journey: building a strong foundation first, clarifying your business goals, checking your margins and operations, choosing the right bundle or discount type for the job, and constantly reassessing your results. By the end of this article, you will not only know how to set up a code but also how to ensure that code actually helps your bottom line.

The Technical Steps: How to Create Your First Discount Code

Setting up a discount in the Shopify admin is a straightforward process, but the details in the settings are where merchants often make mistakes that can lead to unintended margin loss. Here is the step-by-step path to creating a standard discount code.

Accessing the Discounts Menu

Log in to your Shopify admin and look at the left-hand navigation sidebar. Click on Discounts. This is your central hub for all promotions. You will see a list of any existing discounts and a button in the top right corner that says Create discount.

Selecting Your Discount Type

Once you click create, Shopify will ask you to choose a discount class. These typically fall into four main categories:

1. Amount off products: A fixed dollar amount or percentage off specific items or collections.
2. Amount off order: A discount applied to the entire cart value.
3. Buy X Get Y (BOGO): A classic promotional tool where buying one item triggers a discount on another.
4. Free shipping: Removing shipping costs based on certain criteria.

Configuring the Details

After picking a type, you need to define the specifics:

• Method: Choose "Discount code" if you want customers to enter a string of text (like WELCOME10) at checkout. Choose "Automatic discount" if you want the price to drop automatically when conditions are met.
• Value: Enter the percentage or fixed amount.
• Minimum Requirements: This is a critical step for protecting your Average Order Value (AOV). You can set a minimum purchase amount (e.g., "$50 or more") or a minimum quantity of items.
• Customer Eligibility: You can limit the code to specific customer segments, such as "New customers" or "Top spenders."
• Usage Limits: To prevent a code from going "viral" and hurting your margins, you can limit the total number of times a code can be used or limit it to one use per customer.
• Active Dates: Set a start and end date to create urgency and ensure you don’t accidentally leave a holiday sale running in mid-July.

Key Takeaway: Always test your discount code in an incognito browser window before announcing it to your email list. Check that it applies to the right items and respects your minimum spend requirements.

Foundations First: Preparing Your Store for Discounts

Before you launch a discount, your store must be ready to receive the traffic. A discount code is a "supportive tool" inside a bigger commerce system; it cannot fix a broken shopping experience.

If your product descriptions are vague, your images are blurry, or your mobile site is slow, a 20% discount code won't save the sale. Focus on these foundations before worrying about the discount:

• Speed and Mobile UX: Most shoppers will use their phones. Ensure your "Apply Discount" field is easy to find but doesn't distract from the checkout flow.
• Transparent Policies: Clearly state your shipping and return rules. A discount code feels less valuable if the shopper discovers a high shipping fee at the very last second.
• Trust Signals: High-quality reviews and clear contact information provide the "permission" a shopper needs to use a code and complete a purchase.

Clarify the Why: What is the Goal of This Discount?

Not all discounts serve the same purpose. Before you create a code in Shopify, ask yourself what you are trying to achieve. For a deeper dive into this metric, see our Average Order Value (AOV) guide.

Increasing Average Order Value (AOV)

If your goal is to get shoppers to spend more per visit, a flat 10% off code for any order might actually work against you. Instead, use a "Minimum Spend" requirement. For example, "Get $15 off when you spend $75." This encourages a shopper who has $60 in their cart to find one more small item to hit the threshold.

Moving Stale Inventory

If you have a specific product taking up warehouse space, use a "Buy X Get Y" discount. You can offer the slow-moving item for free or at a steep discount when a customer buys a top-seller.

Customer Acquisition

If you simply need to get a "first-time" buyer to trust you, a simple percentage-off code for their first order is a standard and effective tactic. However, keep the usage limit strictly to "one per customer" to ensure people don't create multiple accounts to abuse the offer.

Margin and Operations Check: Protecting Your Profits

This is the stage where many Shopify merchants run into trouble. A 20% discount sounds great for marketing, but have you calculated the impact on your net profit? If you're refining the math, our bundle pricing guide is a useful reference.

Understanding Your "Floor"

Your "floor" is the absolute lowest price you can sell a product for while still covering COGS (Cost of Goods Sold), shipping, packaging, and advertising costs. If your margins are 30% and you offer a 25% discount, you are likely losing money on every sale once you factor in credit card processing fees.

Discount Stacking and Conflicts

Shopify allows you to decide if a discount code can be "stacked" with other discounts.

• The Risk: A customer uses a 10% "Welcome" code, a 15% "Summer Sale" automatic discount, and a "Free Shipping" code all at once. Suddenly, your 25% margin is gone.
• The Fix: Review the "Combinations" section in the Shopify discount settings. Explicitly choose which classes of discounts can work together. In most cases, it is safest to allow a product discount to combine with a free shipping discount, but not with another product discount.

Fulfillment Complexity

If you create a "Buy 3, Get 1 Free" discount, does your fulfillment team or 3PL (Third-Party Logistics) know how to handle it? Sometimes, automated discounts can create confusion in packing slips. Always run a test order and look at how the order appears in your "Orders" list to ensure the instructions for your warehouse are clear.

Caution: If you are unsure about the legalities of "original" vs. "sale" pricing in your region (especially in the EU or UK), consult a legal professional. Price transparency laws are becoming stricter regarding how discounts are advertised.

Moving Beyond Codes: The "Bundle with Intention" Strategy

While a simple text code is a great starting point, modern eCommerce often requires a more integrated approach. This is where bundling comes in. Instead of asking a customer to remember a code, you can present the value directly on the product page.

Why Bundles Often Outperform Single Codes

A single discount code is a blunt instrument. A bundle is a curated experience; for examples, browse our case studies.

• Reduced Choice Overload: If you sell skincare, a "Morning Routine Bundle" helps the customer decide what to buy, rather than forcing them to pick through 20 individual serums.
• Integrated Value: When a shopper sees a "Bundle and Save 15%" message on a product page, the value is immediate. They don't have to wait until the checkout page to see if their code works.
• Better Inventory Management: Bundles allow you to pair high-margin accessories with lower-margin core products, balancing your overall profitability.

Transitioning to Bundles

If you find that your discount codes are being used primarily for the same 2 or 3 products, that is a signal from your customers. They like those products together.

1. Identify the Pairings: Look at your Shopify analytics to see which items are frequently bought together.
2. Create a Mix & Match Offer: Use a tool like MBC Bundles on Shopify to let customers choose their preferred scents or colors within a fixed-price bundle.
3. Test the "Minimal Effective Setup": Don’t build 50 bundles at once. Start with your top three products and one "Buy More, Save More" (Quantity Break) offer.

Scenarios: Real-World Discount Logic

Let’s look at how to apply this "intention-led" logic to common store problems.

Scenario A: High Traffic, Low Conversion If shoppers are visiting your site but leaving without buying, your hurdle might be price perception or "risk."

• The Move: Test a "First Purchase" discount code that is delivered via a pop-up or a header bar.
• Next Step: Audit your product page first. Is the "Add to Cart" button clear? If the page looks great but conversion is still low, the code acts as a low-risk entry point for the customer.

Scenario B: High Volume, Low AOV If you are processing hundreds of orders but most are for a single, low-priced item, your shipping costs are likely eating your profits.

• The Move: Disable flat percentage codes. Create a "Free Shipping on orders over $X" discount.
• Next Step: Set the free shipping threshold about 15-20% higher than your current average order value. This nudges customers to add one more item to the cart.

Scenario C: Launching a New Product When you have a new arrival, you want to generate reviews and momentum quickly.

• The Move: Use a "Buy X Get Y" discount where purchasing a best-seller gives the customer a discount on the new arrival.
• Next Step: Send this specific code to your "VIP" customer segment only. This rewards your loyalists and keeps the discount from being public and devaluing the new product's brand.

Performance and Measurement: What to Track

A discount code is an experiment. If you don't measure the results, you are just guessing. In the Analytics > Reports section of Shopify, you can filter sales by "Discount." If you want a deeper framework for what to measure, see our bundle metrics guide.

Key Metrics to Watch

• AOV (Average Order Value): Did the discount code make people spend more, or did it just give them a cheaper version of what they were already going to buy?
• Conversion Rate: Did the presence of the code actually increase the percentage of visitors who bought something?
• Revenue per Visitor (RPV): This is often the most important metric. If you offer a 20% discount and your conversion rate stays the same, your RPV will drop, meaning the discount failed.
• Attach Rate: For BOGO or Bundle offers, track how often the "Y" item is actually added to the cart. If the attach rate is low, the pairing might not be relevant to your shoppers.

The "One Change" Rule

To truly understand if a discount is working, try to change only one variable at a time. If you change your theme, your ad creative, and your discount code all in the same week, you won't know which one caused the change in sales.

Trust and Compliance Guardrails

As your store grows, the complexity of managing discounts increases. It is vital to maintain a high standard of security and transparency.

When to Bring in Help

• Theme Conflicts: If your discount code isn't appearing correctly at checkout or your bundle widget looks "broken" on mobile, do not try to hack the code yourself if you aren't a developer. Test the changes on a duplicate theme first. If the issue persists, reach out to your app's Help Center or a Shopify Expert.
• Payment and Fraud: Occasionally, high-value discount codes can attract "bad actors" or bot traffic. If you see a surge in orders with high fraud risk scores using a specific code, contact Shopify Support and your payment provider immediately.
• Legal/Tax Advice: Discounts can change how sales tax is calculated in different jurisdictions (e.g., is tax calculated before or after the discount?). We are not tax professionals; you should consult an accountant or tax specialist to ensure your "Discounted Total" is compliant with local laws like Shopify Markets.

Summary: A Checklist for Intentional Discounting

To wrap up, remember that how to do a discount code on Shopify is as much about the "Why" as the "How." Follow this phased journey for every promotion you run:

• Foundations: Is the site fast? Is the mobile UX clean? Are the policies clear?
• Goal Clarity: Are you trying to raise AOV, move old stock, or acquire new customers?
• Margin Check: Calculate your profit floor. Ensure you aren't "stacking" yourself into a loss.
• Intention: Choose the right tool. Sometimes a Mix & Match bundle is better than a simple text code.
• Setup: Use Shopify's native tools for simple codes; use a dedicated app like install the MBC Bundles app for complex bundles or tiered discounts.
• Measure: Watch your RPV and AOV. If the numbers don't move in the right direction, stop the discount and try a different approach.

"A discount is a conversation with your customer. Make sure you are saying 'Thank you for buying more,' rather than 'I don't think my product is worth the full price.'"

By focusing on value and relevance rather than just price-cutting, you build a sustainable brand that grows through customer loyalty and healthy margins. Whether you are setting up your very first code or optimizing a complex "Buy More, Save More" strategy, keep the customer's experience—and your own profitability—at the center of every decision.

FAQ

How do I stop customers from using two discount codes at once?

In the Shopify admin, go to the "Combinations" section of your discount settings. You can specifically check or uncheck boxes to allow or disallow a code from working alongside "Product discounts," "Order discounts," or "Shipping discounts." By default, Shopify often prevents stacking unless you explicitly enable it. Always test your checkout with multiple codes to be certain.

What is the difference between a discount code and an automatic discount?

A discount code requires the customer to manually type text (like SAVE20) into a field at checkout. An automatic discount applies itself to the cart as soon as the conditions are met (e.g., adding 3 items). Automatic discounts often have higher conversion rates because they reduce friction, but discount codes are better for tracking the success of specific marketing campaigns or influencers.

Why isn't my discount code showing up on the mobile checkout?

On mobile devices, Shopify sometimes collapses the "Order Summary" section to save space. The customer might need to click a link that says "Show order summary" or "Have a discount code?" to reveal the input field. To improve the experience, you can mention this in your cart page text or use an app that allows customers to apply the code earlier in the shopping journey.

Can I offer a discount that only applies to certain collections?

Yes. When creating an "Amount off products" discount, you can choose between "Specific products" or "Specific collections." This is a great way to run a sale on a seasonal category (like "Summer Essentials") without discounting your year-round best-sellers. Just ensure your collections are up to date before launching the code.