How this calculator works
A discount does not come out of revenue. It comes out of margin, which is a much smaller number, so the proportional damage is far larger than the discount percentage suggests.
Twenty percent off a product with a 30% margin removes two thirds of the profit. To earn the same money you would need to sell three times as many. This calculator shows both figures before you commit.
The formula
- Discounted price = normal price × (1 − discount %)
- Profit after = discounted price − unit cost − (discounted price × fee %)
- Share of profit lost = (profit before − profit after) ÷ profit before
- Sales multiple to break even = profit before ÷ profit after
What to watch for
- The discount percentage and the profit percentage lost are different numbers, and the gap grows as your margin narrows. On a thin margin, even a small discount can wipe out the whole profit.
- The sales multiple is the honest test. If a 20% discount means selling three times as many units to earn the same money, ask whether the promotion will plausibly triple your volume.
- Selling fees are charged on the discounted price, so they fall slightly too — but nowhere near enough to offset the discount.
- Discounts also reset expectations. A product that is regularly on sale becomes a product whose real price is the sale price.
Common mistakes
- Assuming a 20% discount costs 20% of the profit. It usually costs far more.
- Discounting from a price that was already thin, which turns a small margin into a loss.
- Running a sale to "move stock" without checking whether the sale price covers unit cost at all.
- Comparing discount revenue against zero rather than against what those units would have sold for anyway.
Frequently asked questions
How much does a discount really cost me?
Far more than the discount percentage. On a $100 product costing $70, your profit is $30. A 20% discount takes $20 off the price, which leaves $10 — you have given away two thirds of the profit for a fifth off the price. The narrower your margin, the more extreme this gets.
How much extra do I need to sell to make up for a discount?
Divide the profit before the discount by the profit after. In the example above that is $30 ÷ $10 = 3, so you would need to sell three times as many units to earn the same money. That is the figure worth putting next to any promotion plan.
Is it ever worth discounting?
Yes — to clear stock that is tying up cash or will not sell later, to win a customer who will buy again, or to fill genuinely idle production time. What rarely works is discounting to compete on price, because the volume needed to compensate is usually implausible.
Should I raise my price before discounting it?
Inflating a price purely to advertise a bigger discount is misleading and, in many jurisdictions, illegal — most reference-price rules require the higher price to have been genuinely charged for a period. Set an honest price and discount from it, or do not discount.