Discount
See how a product discount affects your selling price and profit margin.
Discount
See how a product discount affects your selling price and profit margin.
A discount feels good for customers, but it eats straight into your profit margin. This calculator shows you exactly what a discount does to your price and your margin, so you can offer one with your eyes open instead of guessing.
It can help you answer questions like:
- Can I actually afford to run this sale or promotion?
- How much of my profit am I giving away with this discount?
- What’s the biggest discount I can offer before I’m barely making money?
What you’ll need to enter:
- Original price — what you’d normally charge. (Example: $100.)
- Discount — the percentage off you’re considering. (Example: 20%.)
- Cost per unit — what the item actually costs you to make or buy (not what you sell it for). (Example: $40.)
How it works
We apply the discount to your price, then work out your profit margin — what percentage of the sale price is actually profit — both before and after the discount, so you can compare them side by side.
What the result tells you
With the example numbers, a 20% discount drops your $100 price to $80. Your margin falls from 60% down to 50% — still healthy, but worth knowing before you commit.
A few things worth checking before you run a discount:
- Set a floor you won’t go below. Decide in advance the lowest margin you’re willing to accept, so a “quick sale” doesn’t accidentally become a loss.
- Think about volume. A smaller margin can still work if the discount brings in enough extra sales to make up for it — just make sure that extra volume is realistic, not hopeful.
- Compare against your cost, not just your usual price. As long as the discounted price is above your cost per unit, you’re still making some profit — below it, you’re paying customers to take stock off your hands.
- Use discounts with a purpose. Clearing old stock, winning a new customer, or filling a quiet period are all good reasons for a discount — discounting out of habit usually just trains customers to wait for the next sale.
In short: a discount can be a smart move or a quiet profit leak — this calculator helps you tell the difference before you offer it.
Figures and results from these calculators are a general guide only and are not financial or professional advice. Consider getting professional advice, such as from a bookkeeper or accountant, before making decisions based on these results.