There are two type of Discount features, per Order Discounts (or Coupons) and Item Discounts (a.k.a. Quantity Pricing).
The Coupons/Discounts Code is different from the Item Discount prices. Item discount prices (group discount - quantity pricing, special discount) can be set up at the item page and customer can view the discount prices when you enable "Display Item Discount Prices" at Item setup.
Order Discounts (Coupons) - discount code
You can set up discount code per order or per individual item.
This type of discount uses a discount or coupon code. With this type of discount, you can issue Discount codes to your customer. Your customer would simply enter the special code during checkout to receive a percentage or fixed amount off their order. To enable these discount functions for customer to enter the code during checking out, you must turn on "Enable Coupons/Discounts" at Item Setup.
To setup this type of Discount Code, click on "Add New" under the Admin/Promotions
Discount Name
This is the name of the discount, mostly for internal purposes (eg. Referral Discount, Christmas Special)
Discount Code
Enter a unique code word that your customers can enter during checkout to receive this discount on their order.
Apply Item
Per order discount: Leave blank apply to all items in the order
Per item discount: Add item from the item list
Date Range
You can specify when a Discount code is valid. The discount is only valid when used during the dates you specify.
Discount Amount
Discounts are applied to the order amount (sub total). The discount can be percentage of the order total, a fixed amount, or a combination of both.
Order Minimum
You can specify a minimum purchase amount. The discount will only be applied to an order if the order sub total exceeds this value.
Restrict Usage
You can limit how many times a Discount can be used. For example, if you only want the first 100 shoppers to get this discount, check the Restrict Usage box, and enter 100 in the Max Usage field.
