Marketplace Discount Codes: Who Funds Them and What Happens to the Commission

A marketplace discount code is the one marketing tool that reaches into somebody else's cash: your team announces it, the buyer types it into the cart, and the charge lands in the settlement of a seller who learns about the campaign from a statement.

A discount code costs exactly the size of the discount multiplied by the number of redemptions. One thing has to be settled before the campaign starts: whose account that amount comes out of.

If you do not settle it openly, your settlement engine will settle it for you. It takes the discount off whichever line it happens to be standing on, and that line belongs to the seller.

This article breaks down:

• Which 4 levels of reach can a code have?
• Which 3 arrangements fund a code?
• Which amount is the commission taken from?
• Which limits decide what it costs?

Key insights

• The reach of a code is a list of the accounts you are reaching into: the whole cart, a category or brand, one named seller, or named offers, and only the last two have somebody to agree it with before the announcement.
• The three arrangements put the €100 somewhere: you fund it, the seller funds it, or you split it, and only funding it yourself with the commission on the pre-discount price leaves the seller exactly where they stood at €880.
• The commission base turns one campaign into six settlements: on a base of €1,000 you keep between €20 and €120, on a base of €900 between €8 and €108, and every one of them closes to the €900 the buyer paid.
• The limits that decide what a code costs are the redemption cap, a unique code against a public one, the minimum value threshold, and the stacking rule: raising the cap from 5,000 to 10,000 uses costs €500,000 while the discount stays at 10%.

Why does a discount code reach into somebody else's cash?

A banner, a mailing, and a slot on the home page cost you and nobody else. A discount code is different.

Your marketing team announces it, the buyer triggers it by typing a few characters into the cart, and the charge lands in the settlement of a seller who finds out about the campaign from a statement after the fact. It is the only line in a seller's settlement that comes out of a decision taken by two parties, neither of whom is the seller.

One cart runs through this entire article: €1,000, commission 12%. With no campaign, the buyer pays €1,000, you earn €120, and the seller keeps €880.

That is the zero point for every calculation below.

Now you launch a "10% off everything" code. The buyer pays €900.

€100 has disappeared from the table, and the whole rest of this text is taken up by one question: whose money it was.

Which 4 levels of reach can a code have?

Reach looks like a campaign parameter, and it is a list of the accounts you are reaching into. There are four levels, in order of rising control.

The whole cart. The easiest to announce and the most expensive to settle, because it covers the offers of every seller.

That includes the ones who know nothing about the campaign.

A category or a brand. Narrower, and it still picks sellers for them: everyone with an offer in that category is in the campaign, whatever their margin.

A specific seller. The only reach you can agree on before you announce it, because it has a single person on the other side of the conversation.

A specific offer. The narrowest and the cleanest to settle, because the seller submitted the items themselves.

That is what seasonal campaigns look like among practitioners today: a spreadsheet with the item code, the normal price, the promotional price, and the period, sent by hand to the marketing team and wired up to a campaign landing page. That is the bar the market sets rather than an exception to it.

A separate case is your own goods and seller goods sitting side by side in one cart. The most common answer is not a clever split.

It is excluding seller offers from codes altogether. That is a decision rather than a missing feature.

The price of it shows up in the cart, where the buyer sees one total and a code that worked on some of the items (a cart with several sellers and showing the price).

Which 3 funding arrangements can a code take?

Start with the mechanic that tells you a system is mature: a discount and the funding of that discount are two numbers on one line rather than one. The first says how much cheaper the cart gets.

The second says how much of that you deduct from the seller at payout. Zero in the second number means "I am paying." Equality between the two means "the seller is paying." Anything in between is co-funding in a stated proportion.

A system that carries only the first number has no way to document who paid. The payer then becomes whoever the discount happens to be sitting on.

1. You fund it

The seller sold for €1,000, and that is what enters their settlement.

The missing €100 comes out of your own revenue. The seller does not feel the campaign at all, and you feel all of it.

2. The seller funds it

They sold for €900, and everything downstream is calculated from that.

You put in nothing, and you have announced a cut to somebody else's price.

3. Half and half

The seller gives up €50, and you give up €50.

The proportion can be anything you like, as long as it is written down before the start rather than reconstructed afterwards.

There is a fourth arrangement, common and rarely calculated: the seller funds the discount, and you compensate them with a reduced commission for the duration of the campaign. At 8% instead of 12%, the commission on €900 is €72 rather than €120, and the seller keeps €828.

Against the €880 they would have had with no campaign, they lose €52, and you lose €48. That is the same €100, split almost down the middle.

It looks like a gesture. It is co-funding arrived at by accident.

Practitioners describe this variant as one settled by a correction after the fact, which is the worst possible form: the seller sees the full commission first and only afterwards a document that reduces it. If you pick it, get the lower rate into the grid before the first order (how much commission you can charge and thresholds, caps and negotiated rates).

Which amount is the commission calculated from after a discount?

The sentence "commission 12%" does not say what it applies to. With a discount code, there are two candidates:

• on the price before the discount: 12% × €1,000 = €120,
• on the amount the buyer paid: 12% × €900 = €108.

Cross that with the three funding arrangements, and one campaign turns into six different settlements. The buyer pays €900 in all of them.

Every column closes to €900: 880 + 20, 780 + 120, 830 + 70, 892 + 8, 792 + 108, 842 + 58. The arithmetic is correct in all six cases, and that is the problem, because each of them can be defended after the fact, while the difference to you runs from €8 to €120 on a single cart.

Only one result leaves the seller exactly where they stood with no campaign: €880, meaning you fund the discount and calculate the commission on the price before it. That is the only arrangement in which "we are not touching the seller" is a true statement.

A base of "before the discount" holds up only when you fund the discount. In that case, the seller genuinely did receive €1,000.

If the seller funds the discount and you still calculate the commission on the pre-discount price, you are charging commission on money that nobody ever paid. The settlement is then formally consistent with the contract and impossible to defend in a conversation.

In large commission systems, the base is defined as the full price of the line together with shipping and add-ons. Whether the discount is subtracted from it is often described separately, and it has to be read rather than assumed.

What you must not do is hold one rule in the system and a different one in the document your sellers signed (the rate in the system against the signed document).

How do you split one discount between several sellers?

A €1,000 cart from three sellers: €500, €300 and €200. The code says "€100 off purchases over €800." There is one discount amount, and there are three settlements.

A proportional split gives €50, €30, and €20. An equal split gives €33.33, €33.33 and €33.34.

That turns the same code into a 6.7% cut for the first seller and a 16.7% cut for the third. Charging a single seller behaves differently again.

Pick the one whose category was in the campaign, and the seller who brought €200 into the cart pays the whole €100.

Proportional is the only defensible option, for three independent reasons. Everyone gives up the same percentage, so the promise of "10%" holds true inside every group in the cart.

When a single item comes back, you can say how much goes back and whose money it was. And finally, allocating one discount in proportion to the prices of its components is the same mechanism the revenue recognition standard requires for a discount on a bundle.

Your accounting team is going to apply it anyway ("Marketplace Revenue Recognition: Do You Book the Commission or the GMV?").

That leaves the remainder in cents. Lines of €333.33, €333.33 and €333.34 with a €100 discount produce shares of €33.333, €33.333 and €33.334.

Rounded, that is €33.33 three times, which comes to €99.99. The missing cent has to have an owner named by a rule rather than by accident, or the discount total on the statement stops matching the amount the cart came down by (the ledger behind a balance and payment reconciliation).

The calculation on a base of "after the discount", meaning on €450, €270 and €180: commission of €54, €32.40 and €21.60, €108 in total. Payouts of €396, €237.60 and €158.40, €792 in total.

The sum is €900. That is exactly what the buyer paid.

Which 4 limits decide what a code campaign costs?

Teams negotiate the percentage, and the financial risk sits in the number of redemptions. A 10% discount on our cart costs €100.

Pushing it to 15% costs €50 per cart, which at 5,000 redemptions is €250,000. Raising the redemption cap from 5,000 to 10,000 costs €500,000.

The discount has not moved from 10%. The second number comes up in meetings incomparably less often.

Four settings get decided together with the percentage.

1. The redemption cap

A campaign without a hard limit on uses has hope rather than a budget.

2. Unique code or public code

A public code leaks outside its intended channel sooner or later.

From that moment, you are funding a discount for traffic you would have had anyway. One control genuinely works: a code unique to the buyer, with one use and an expiry date.

3. The minimum value threshold

Settle whether the €800 counts across the whole cart or within one seller's group.

Those are two different campaigns. And check whether you measure the threshold before the discount or after it.

4. Exclusions and stacking

An offer at €1,000, marked down by the seller to €700: a "10% off" code calculated on €700 is €70.

Calculated on the catalog price, it is €100. Thirty euros out of one thing nobody said out loud.

Documentation for systems in this class warns openly that stacking promotions without a hard floor at zero can produce a free cart. That is why the default mode is "the best one wins" rather than "we add everything up."

Abuse comes from three places: the code circulates outside its channel, the same buyer redeems it from several accounts, and one order gets broken into several carts so that it hits the threshold more than once. There is one control, and it is cheap: a unique code, a hard cap, and a threshold measured consistently.

One last trap, from outside the campaign: a discount changes the base for a refund. The buyer gets €900 back rather than €1,000, and the maximum refund on a line is the value after the discount has been allocated.

What happens to the commission at that point is a separate question (who pays for a refund and the commission on a refunded order).

What do discount codes change about the rest of your build?

1. A code campaign is a line in a settlement rather than a marketing activity

The discount has to reach the seller's statement as a separate, named line with an amount and a stated payer. Otherwise, the payout stops breaking down into parts (the ledger behind a balance and payment reconciliation).

2. The funding terms for codes belong in the contract rather than in the brief

Seller consent to co-funding and the way those rules can be changed: the documents you sign with a seller and the rules on decisions about sellers.

3. The commission base settled here comes back everywhere else

It comes back in the payment split, in balances, in refunds, and in what you book as revenue.

4. This is not the whole promotional layer

Promotions pinned to an offer and campaigns that sellers join on their own are covered in the chapter on campaigns on somebody else's assortment. Points as a means of payment have a chapter of their own. So does paid placement.

How do you cost a code campaign before you announce it?

Ask your own team the first five questions. The sixth one goes to your vendor.

1. What is the maximum cost of this campaign? The discount per cart times the redemption cap. If you cannot produce that number, you have a percentage rather than a budget.
2. Who pays every euro of the discount, and is that split written down before the start or reconstructed from statements afterwards?
3. Which amount the commission runs on: the price before the discount or the price after it. Then check that the seller document says the same thing.
4. How one discount amount gets divided between three sellers, and who ends up with the remainder in cents.
5. What happens when a code lands on an offer that has already been marked down, and whether a floor exists below which the cart cannot go.
6. Show me a seller statement for an order covered by a code. It needs a separate discount line, the amount funded by the operator, and the commission on the declared base. No such screen means this layer is something you will have to build.

Which mistakes do operators make about discount codes?

1. Announcing the percentage before settling the payer

The campaign goes live, and the question "who is funding this" gets answered at the first settlement run. That is after the money has been spent.

2. Commission on the pre-discount price when the seller funds the discount

Formally consistent with the contract, impossible to defend in conversation, and the fastest way to get sellers opting out of your campaigns.

3. A campaign with no redemption cap

A marketing cost that grows faster the better it works.

4. The discount as a single amount under the cart total

It belongs to no group, so when one item comes back, nobody can work out how much goes back and whose money it was.

5. Compensation through a reduced commission, settled by a correction

The seller gets the full charge first, then the document, and in the meantime, a phone call to your support team.

What do you still have to settle about your own codes?

This article does not settle whether your markdown is fair, or how you are allowed to present it. Discount presentation and price comparability are set out in the chapters on a cart with several sellers and showing the price.

Obligations toward sellers and buyer data on codes issued by name each have a chapter of their own.

What is left is entirely your own decision and can be worked out on a whiteboard: what this campaign costs, who pays every euro of it, and which amount the commission is calculated on. Three numbers, before the start.

Summary: Whose money is the discount?

Whoever's line the discount happens to be standing on, unless you named the payer before the campaign started. A code is the only marketing tool that reaches into somebody else's cash: your team announces it, the buyer types it, and the charge lands in the settlement of a seller who finds out afterwards.

Two numbers settle it, and mature systems carry both: how much cheaper the cart gets, and how much of that you deduct from the seller at payout. Beside them sits the base the commission runs on, and that single word moves your result from €8 to €120 on one cart.

Then the arithmetic nobody argues about in the meeting: the percentage is negotiated, and the bill is set by the redemption cap.

Ask a vendor to show you a seller statement for an order covered by a code, with the discount, the funded share, and the commission base as separate lines. Building a marketplace where the payer of every discount is a field rather than a reconstruction?

Talk to us about the build.

Frequently asked questions on marketplace discount codes

Who pays for a discount code on a marketplace?

A discount code is paid for by whoever the system deducts it from, which is the seller unless you recorded a different payer. The three defensible arrangements are that you fund it, the seller funds it, or you split it in a stated proportion.

The fourth one, compensating the seller with a lower commission, is co-funding arrived at by accident.

Is marketplace commission charged before or after a discount?

Marketplace commission is charged before or after a discount depending on what your document says, and the choice is worth €12 on a €1,000 cart. Charging on the pre-discount price holds up only when you funded the discount, because then the seller really did receive €1,000.

If the seller funded it, you are charging commission on money nobody paid.

How do you split one discount between several sellers?

In proportion to the value each seller contributed to the cart. An equal split turns one code into a 6.7% cut for one seller and 16.7% for another.

Proportional keeps the promise true inside every group, survives a partial return, and matches how a bundle discount is allocated in accounting anyway.