How to Discount Gift Cards on Shopify

Table of Contents

1. Introduction
2. Understanding the Basics of Shopify Gift Cards
3. Practical Methods: How to Discount Gift Cards on Shopify
4. Advanced Strategy: Bundling Gift Cards with MBC Bundles
5. The Operational Check: Margins and Accounting
6. How Bundling Tools Actually Work on Shopify
7. Measuring Success: What Metrics to Track
8. When to Bring in Professional Help
9. The MBC Bundles Approach: A Step-by-Step Summary
10. Conclusion
11. FAQ

Introduction

Gift cards are often the unsung heroes of a Shopify store. They are the perfect "emergency" purchase for a last-minute shopper, a low-friction way to introduce a brand to a new person, and a powerful tool for maintaining cash flow. However, many merchants treat gift cards as static products that just sit in the footer menu. When you learn how to discount gift cards on Shopify, you transform them from a passive offering into a proactive growth engine.

Whether you are a new Shopify founder looking to build initial momentum or a growing DTC brand preparing for the holiday rush, understanding the mechanics of gift card promotions is essential. It is not just about "slashing prices." It is about strategic placement and intentional value.

In this guide, we will walk through the specific technical and strategic steps to discounting gift cards. We follow the MBC Bundles philosophy: start with strong foundations, clarify your specific goals, perform a rigorous margin check, choose the right bundle or discount type, implement the simplest effective version, and then reassess based on real data. By the end of this article, you will have a clear decision path for using gift card discounts to lift your Average Order Value (AOV) and improve customer retention.

Understanding the Basics of Shopify Gift Cards

Before we dive into the "how," we must understand the "what." In Shopify, a gift card is treated differently than a standard t-shirt or a bottle of skincare serum. It is essentially a financial liability—a promise of future value.

When a customer buys a gift card, you are receiving payment for a product that hasn't been "bought" yet. This has specific implications for your accounting and your discount logic. On most Shopify plans, you can issue gift cards manually or sell them as products.

Foundations First: Clean Merchandising

Before you apply a single discount, ensure your gift card product page is professional. It should have clear imagery, a concise description of how the digital delivery works, and simple denomination choices (e.g., $25, $50, $100). If the foundation is shaky—meaning the product page looks untrustworthy or the delivery instructions are confusing—a static product page issue like that will not fix your conversion rate.

Clarify the "Why" Behind the Discount

Why are you looking at how to discount gift cards on Shopify? Common goals include:

• Boosting Immediate Cash Flow: High-volume gift card sales provide upfront capital.
• Customer Acquisition: A discounted gift card is an easy "entry point" for someone who isn't ready to commit to a full-priced physical product.
• Increasing AOV: "Buy a $100 jacket, get a $20 gift card for $10" is a powerful incentive to spend more.
• Reducing Returns: Encouraging gift cards over specific sizes or colors can lower your return rate during peak seasons.

Key Takeaway: Gift cards represent future purchasing power. When you discount them, you are essentially "buying" future revenue today. Ensure your margins can handle that future purchase at the reduced entry price.

Practical Methods: How to Discount Gift Cards on Shopify

Shopify provides several native ways to handle this, and the MBC Bundles Shopify app can extend these capabilities to create more sophisticated "Bundle with Intention" offers.

Method 1: Creating a Discounted Gift Card Product

The simplest way is to treat the gift card like a sale item.

1. Navigate to your Products section and select your Gift Card product.
2. Adjust the price of a specific denomination. For example, if you have a $100 denomination, you can set the "Price" to $80.
3. Set the "Compare at price" to $100.

This shows the customer a clear 20% savings. However, there is a catch: the gift card still carries a $100 redemption value. This is the most transparent way to show value, but it is "always on" unless you manually change it back.

Method 2: Using Discount Codes

You can create a specific discount code (e.g., "GIFT20") that applies only to gift card products.

1. Go to Discounts > Create discount.
2. Choose "Amount off products."
3. Under "Applies to," select "Specific products" and search for your gift card.
4. Set the percentage or fixed amount.

This method is excellent for targeted email campaigns or influencer partnerships. It allows you to track exactly which channel is driving gift card sales.

Method 3: Automatic Discounts

Automatic discounts are powerful because they reduce friction. The customer doesn't have to remember a code; the price drops in the cart once the criteria are met.

1. Go to Discounts > Create discount > Amount off products.
2. Select "Automatic discount."
3. Apply it to your gift card product.

What to do next:

• Audit your current gift card product page for clarity and mobile speed.
• Determine if a "Compare at price" or a "Discount code" fits your current marketing campaign better.
• Test the checkout flow on a mobile device to ensure the discount appears clearly.

Advanced Strategy: Bundling Gift Cards with MBC Bundles

While native Shopify discounts are a great starting point, they can be limiting. At the MBC Bundles Shopify app, we believe in "Bundling with Intention." This means using the gift card as a strategic add-on rather than just a standalone discounted item.

The "Buy X Get Y" Gift Card Approach

Instead of just discounting a gift card, why not use it to move other inventory? This is a Buy X Get Y (BOGO) style offer. For example: "Buy our Best-Seller Bundle and get a $25 Gift Card for only $10."

This accomplishes two things:

1. It increases the initial AOV of the order.
2. It guarantees the customer (or their friend) will return to your store to spend that $25.

Quantity Breaks on Gift Cards

If you want to encourage bulk buying (perfect for corporate gifting), you can use quantity breaks.

• Buy 1 gift card: Full price.
• Buy 5+ gift cards: 10% off.
• Buy 10+ gift cards: 15% off.

This is a classic volume discount strategy that rewards higher spend without devaluing the brand for single-purchase customers.

Mix & Match with Gift Cards

You can allow customers to build their own "Gift Box" using a Mix & Match or Bundle Builder experience. A customer could choose a candle, a blanket, and a $20 gift card, receiving a 15% discount on the entire bundle. This makes the gift card feel like a thoughtful part of a larger curated experience.

Caution: When bundling gift cards with physical products, pay close attention to your "Discount Stacking" rules in Shopify. If a customer uses a 10% site-wide code on top of a bundle that already includes a discounted gift card, your margins can disappear quickly. Always test your checkout combinations before going live.

The Operational Check: Margins and Accounting

Before you launch any promotion involving a discount on gift cards, you must do the math. Unlike physical products, gift cards have no "Cost of Goods Sold" (COGS) at the moment of sale. However, they represent a 100% margin hit later when they are redeemed if you haven't accounted for the discount.

The "Double Discount" Trap

If you sell a $100 gift card for $80, you have taken a $20 hit to your future margin. If that customer then returns during a 20% off site-wide sale and uses that gift card, they are essentially getting a much deeper discount than you intended.

How to mitigate this:

• Terms and Conditions: Clearly state if gift cards can be used in conjunction with other offers.
• Minimum Spends: Consider a "Spend $100, get a $20 gift card" offer where the gift card is only valid for a future purchase. This protects the margin of the current transaction.

Tax and Compliance

In many jurisdictions, gift cards are not taxed when they are sold because they are considered a "form of payment." Tax is usually applied when the card is redeemed for a physical product.

Important: Tax laws vary significantly by region and country. We strongly recommend consulting with a qualified accountant or tax professional to ensure your gift card discounting strategy complies with local regulations, especially regarding "breakage" (unredeemed gift card value) and escheatment laws.

How Bundling Tools Actually Work on Shopify

If you decide to go beyond basic discounts and use a tool like MBC Bundles to manage your gift card offers, it’s helpful to understand the mechanics under the hood.

Discount Mechanics

Most apps use one of two methods to apply discounts:

1. Draft Orders: Creating a temporary order with a custom price.
2. Shopify Scripts / Functions: Using Shopify’s backend logic to adjust the price in real-time (common in "Built for Shopify" apps).

For the merchant, this means the discount should be clear from the cart page all the way through to the thank-you page.

Inventory and Variants

Gift cards in Shopify are technically products with variants (the denominations). If you are running a "Mix & Match" bundle, the app needs to track which denomination is being added to ensure the discount is calculated correctly.

Mobile UX Implications

Over 70% of Shopify traffic often comes from mobile devices. If your "Buy a Gift Card and Save" offer is buried in a tiny pop-up or requires a complex code entry, you will lose sales.

• Keep it Fast: Ensure your bundling app doesn't slow down your site.
• Clear Visuals: The "Value" (e.g., "Save $10") should be visible near the "Add to Cart" button.

What to do next:

• Review your store's mobile checkout flow. Is the discount obvious?
• Check your Shopify "Discount" settings to see if "Discount Combinations" are enabled or disabled.
• Run a "break-even" analysis: What is the maximum discount you can offer on a gift card while still staying profitable on the eventual redemption?

Measuring Success: What Metrics to Track

Don't just set it and forget it. You need to know if your gift card discounts are actually helping your business grow.

Average Order Value (AOV)

Compare the Average Order Value (AOV) of orders that include a discounted gift card versus those that don't. If your goal was to raise AOV, and the discounted gift card is just "cannibalizing" full-priced sales without increasing the total cart value, you may need to adjust your strategy.

Attach Rate

This is the percentage of orders that include a gift card. If you are running a "Buy X Get Y Gift Card" promotion, track the attach rate of that gift card to the primary product. A low attach rate might mean the offer isn't compelling or isn't being seen.

Redemption Rate (and Time to Redeem)

How quickly are people using these discounted gift cards? If they are redeemed immediately, it might impact your current month's margins. If they aren't redeemed for months, you have gained a "loan" from your customers, but you still have that liability on your books.

Revenue Per Visitor (RPV)

This is a holistic metric. If you offer a gift card discount, does it increase the overall revenue you generate from every person who visits your site? Sometimes a discount lowers your margin per item but significantly increases the number of people who buy, leading to higher total profit.

Key Takeaway: Measure one change at a time. If you launch a new bundle and a new email campaign and a new gift card discount all at once, you won't know what worked.

When to Bring in Professional Help

E-commerce is a team sport. While Shopify and MBC Bundles are designed to be user-friendly, there are times when you should consult an expert.

• Theme Conflicts: If your discount isn't showing up correctly or your cart looks "broken" after installing an app, do not try to hack the CSS yourself unless you are a developer. Test on a duplicate theme and, if issues persist, reach out to the help center or a Shopify partner.
• Security and Fraud: High-value gift card promotions can occasionally attract fraudulent activity. If you see a surge in high-value gift card purchases from a single IP address, contact Shopify Support and your payment provider immediately.
• Legal Compliance: As mentioned, gift card laws are complex. If you are doing high-volume sales across multiple countries (Shopify Markets), a consultation with a legal or compliance specialist is a wise investment.

The MBC Bundles Approach: A Step-by-Step Summary

We believe in a sustainable, intentional journey for every Shopify merchant. Here is how to apply our philosophy to discounting gift cards:

1. Foundations First: Is your gift card product page clean, fast, and mobile-friendly? Are your shipping and return policies clear?
2. Clarify the Goal: Are you trying to get cash now, acquire new customers, or clear out old inventory by bundling it with a gift card?
3. Margin & Ops Check: Can you afford the future "hit" to your margin when the gift card is redeemed? Have you checked for "double-discounting" risks?
4. Bundle with Intention: Choose the method that fits your goal. Is it a simple discount code? A quantity break for corporate gifts? Or a "Buy X Get Y" bundle using MBC Bundles?
5. Implement Minimal Setup: Start with one simple offer. Don't build a complex "Bundle Builder" if a simple automatic discount will do the trick.
6. Reassess and Refine: Look at your AOV and redemption rates after 30 days. Change one variable, and repeat.

Conclusion

Learning how to discount gift cards on Shopify is more than just a technical exercise; it is a merchandising strategy. When done with intention, it can provide a significant boost to your cash flow and help you build a more loyal customer base.

By treating gift cards as a strategic asset rather than a forgotten product, you open up new ways to delight your customers. Whether you are offering a simple $10 discount or building complex bundles that include gift cards as a reward, the key is to stay grounded in your data and your margins.

Key Takeaways for Merchants

• Understand the Liability: Remember that a gift card is a promise of future goods. Your discount today affects your profit tomorrow.
• Reduce Friction: Use automatic discounts or clear "Compare at prices" to make the value obvious to shoppers.
• Avoid the "Double Discount": Be careful with how gift card purchases interact with site-wide sales.
• Think Beyond the Product: Use gift cards in "Buy X Get Y" offers to increase AOV and ensure repeat visits.
• Measure Carefully: Track AOV, Attach Rate, and Redemption Rate to ensure the promotion is meeting your goals.

"Bundling is not just about moving more units; it is about creating a path of least resistance for your customer to see the full value of your brand."

At MBC Bundles, we are here to help you grow your Shopify store responsibly. We encourage you to start simple, test your offers, and always bundle with intention. If you are ready to take your gift card strategy to the next level, explore case studies on how flexible bundling mechanics can transform your store's performance.

FAQ

Can I use a Shopify discount code to buy a gift card?

Yes, but you must specifically configure the discount code to apply to the gift card product. By default, many "entire order" discounts in Shopify may exclude gift cards to prevent margin erosion. When creating your discount, select "Specific products" and ensure the gift card is included in the list.

How do gift card discounts affect my store's margins?

When you discount a gift card, you are reducing your future profit margin. For example, if you sell a $100 gift card for $90, you receive $90 today, but you must provide $100 worth of product later. You must ensure that your product margins are high enough to absorb that $10 difference when the card is finally redeemed.

Is it possible to bundle a gift card with a physical product?

Absolutely. Using an app like MBC Bundles, you can create a "Buy X Get Y" offer where a gift card is the "Y" component. This is a highly effective way to increase Average Order Value (AOV) while guaranteeing that the customer (or their gift recipient) will return to your store in the future.

Why doesn't my gift card discount show up at checkout?

The most common reason is a conflict between multiple discounts. Shopify has specific rules about "discount stacking." If a customer already has an automatic discount applied to their cart, a gift card discount code might not work unless you have specifically enabled "Discount Combinations" in your Shopify admin settings. Always test your checkout flow in an incognito browser window.