Subscription discount codes: how to set them up without losing revenue

Subscription discount codes are codes a customer enters at checkout (or that you apply to their account) to reduce the price of a recurring plan. Unlike a once-off promo code, a subscription discount has a second dimension: how long it lasts. A 20% code that applies to the first month costs you very little; the same code applied "forever" discounts every renewal for the life of the customer.

Getting the settings right is what separates a useful acquisition tool from a quiet revenue leak. This guide covers the settings that matter and a sensible default for each.

The four settings every subscription discount code needs

1. Discount type: percentage or fixed amount

• Percentage (for example 20% off) scales with the plan. It works across plans of different prices and is easy to explain.
• Fixed amount (for example R100 off) is predictable for you, but it's worth more on cheap plans than expensive ones. A R100 discount on a R199 plan is a 50% cut.

Use percentages for broad campaigns and fixed amounts where you want to cap your cost, such as a referral credit.

2. Duration: once, repeating or forever

For annual plans, "once" means the whole first year is discounted, so a 20% once-off code on an annual plan is a bigger give than on a monthly one.

3. Limits and eligibility

Every code should have at least some of these:

• Expiry date. Campaign codes should stop working when the campaign ends.
• Maximum redemptions in total, so a code shared on a deals forum can't be used a thousand times.
• Once per customer, so existing subscribers can't reuse it on each new sign-up.
• Plan restrictions. Allow the code only on the plans the campaign is about.
• New customers only, if the goal is acquisition rather than retention.

4. Where the code can be applied

Decide whether customers enter the code themselves on the checkout page, whether staff apply it to an existing subscription, or both. Self-service codes are great for campaigns. Staff-applied discounts are better for negotiated or retention offers you don't want circulating publicly.

A worked example

Suppose your Growth plan is R499.00 per month, VAT inclusive, and you run a launch code worth 25% for three months.

Your cost per customer is R374.25 over the three months. If the same code were set to "forever", you'd give away R1,497.00 a year per customer, every year. That difference is why duration is the setting to double-check before launch.

(Figures are illustrative.)

Discount codes and VAT

In South Africa, a discount reduces the value of the supply, so VAT is charged on the discounted amount, not the original price. On a VAT-inclusive R499.00 plan, the R374.25 discounted price includes VAT of R48.82 (R374.25 × 15 ÷ 115).

Your invoices should show the discount and the VAT on the reduced amount. If the discount is applied after an invoice has already been issued, issue a credit note rather than editing the invoice. Our guide to tax inclusive vs tax exclusive pricing covers the calculations in more detail.

Naming and distributing codes

• Make codes readable and specific. WINTER25 tells your team what it is; X7Q2P doesn't.
• Use different codes per channel (for example one for a partner newsletter and one for a webinar) so you can see which channel converts.
• Keep private codes private. Retention and negotiated discounts should be applied by staff, not published.
• Retire codes deliberately. Expire them rather than deleting them so historical invoices still make sense.

Common mistakes

1. Forever by default. Some tools default to a duration you didn't intend. Check it on every code.
2. No redemption limit. Codes leak. Assume anything public will end up on a coupon site.
3. Stacking. If customers can combine codes, a 20% and a 30% code together may land somewhere you never planned. Allow one code per subscription unless you've modelled the combinations.
4. Discounting the wrong thing. A code meant for the first month of a monthly plan can become a year-long discount if it's allowed on annual plans.
5. No reminder before the discount ends. Customers who were paying R374.25 and suddenly pay R499.00 without warning are more likely to cancel or dispute. Email them before the full price starts.

For the bigger question of when discounting makes sense at all, see our guide to coupon strategy for SaaS.

How CentraPoint helps

CentraPoint supports coupons at checkout and on subscriptions, so customers can enter a code on your branded hosted checkout page or your team can apply one to an existing subscription. Subscriptions are billed through subscription packages and plans with free trials and automatic renewals, and invoices are VAT-aware, so the discounted amount and VAT show correctly on the branded PDF. See the subscriptions documentation for how plans and renewals work.

Frequently asked questions

What's the difference between a coupon and a discount code?

In most billing tools they're the same thing: a coupon is the discount rule (amount, duration, limits) and the code is what the customer types to redeem it.

Should a subscription discount code apply forever?

Rarely. Forever discounts suit partner or founding-member pricing you're happy to honour indefinitely. For campaigns, use a once-off or limited repeating duration.

Is VAT charged on the discounted price?

Yes. A discount reduces the value of the supply, so VAT is calculated on the discounted amount. The invoice should show the discount and the reduced VAT.

Can I apply a discount code to an existing subscriber?

Usually yes, if your billing system lets staff apply coupons to subscriptions. The discount then applies from the next invoice for the duration you set.