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Discount Impact on Profit Calculator

See how much extra volume a discount needs to keep your gross profit the same.

Quick answer

A discount cuts the margin per unit: new profit = price x (1 - discount) - cost. To keep the same total profit, unit sales must rise by discount / (margin - discount), with margin as a share of price.

Discount Impact on Profit Calculator

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Units

Sales Increase Needed

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Current Margin

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Margin After Discount

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Units Needed

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Gross Profit Change at Current Volume

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Required Volume Increase by Discount

DiscountMargin after discountSales increase neededUnits needed

Assumptions & method

  • Margin m = (price − unit cost) ÷ price. Discount d is a fraction of the original price.
  • Required sales increase = m ÷ (m − d) − 1 = d ÷ (m − d), the volume that gives back the original total gross profit.
  • Units needed = current volume × (1 + required increase). Gross profit is held equal to its pre-discount level.
  • If d is equal to or greater than m, the discounted price does not cover the cost and the increase cannot be recovered.
  • Unit cost and fixed costs are assumed unchanged. Customer lifetime value, brand effects and cannibalisation are not modelled.

Results are estimates based on the figures you enter. They are not guarantees and not financial advice.

The hidden cost of discounting

A discount reduces the profit on every unit sold, so the extra volume has to make up for both the lost margin on existing sales and the new price. The thinner the margin, the larger the volume increase required. If you sell something with a 30% margin and discount it by 10%, you must sell half as many units again just to stand still. When the discount reaches the margin, no amount of extra volume can make up for it. This calculator shows the required increase, the units needed, and a table of other discount levels.

Required volume increase to hold gross profit
Enter unit cost or margin
Table of several discount levels
Warning when discount reaches margin
Profit at current volume after discount

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