Discount Impact Calculator
How much more you must sell to pay for a discount — and which promotion keeps most profit.
At other discounts
Profit per order by promotion
How this was calculated
Results are estimates for general information and planning, not financial advice. Banks and institutions may calculate differently (rounding, fees, rate changes). Confirm figures with your lender or a qualified adviser before deciding.
About the Discount Impact Calculator
A discount comes straight out of your margin. On a product with a 40% margin, 10% off leaves 30 of the 40 — so you have to sell a third more just to earn the same gross profit. Enter the price, the variable cost of one unit and the discount to see the margin before and after, the extra sales volume you need (d ÷ (m − d)) and, if you enter your current sales, the units that keep your profit where it is. It works for a price increase too: how much volume you can lose before profit falls.
The second part compares promotions on a whole order — % off, a flat coupon, buy X get Y free and free shipping — so you can see which keeps the most profit per order and how many more orders each one needs. The discount calculator works out the shopper’s price; this one is for the seller.
How to use it
- Enter the selling price of one unit and its variable cost — what each extra unit costs you: product, packing, payment fee. Leave out rent and salaries, which do not grow with sales.
- If your price includes GST or VAT, tick Price includes GST or VAT and enter the rate; enter the cost without tax.
- Choose Discount or Price increase and enter it as a percentage or as an amount per unit.
- Optionally enter the units you sell now (per week, month or year) to see the units that keep your profit.
- Under Compare promotions, describe a typical order — items, your shipping cost, the shipping fee the customer pays, other costs per order — and the offers you are weighing.
Examples
Extra volume needed = 10 ÷ (40 − 10) = 33.33% 500 units a month must become 667
20 ÷ (40 − 20) = 100% — twice the units for the same profit
10 ÷ (40 + 10) = 20% — you can lose up to 1 sale in 5 and still earn as much
Full price ₹700 profit · 20% off ₹300 (133% more orders needed) ₹200 coupon ₹500 (40% more) · Buy 1 get 1 free −₹300
The formula
With a contribution margin m and a discount d, both as shares of the price, each unit earns m − d instead of m. To earn the same total, volume has to grow by m ÷ (m − d) − 1, which is d ÷ (m − d). This is the break-even sales change in Nagle, Müller and Gijsbrechts’ The Strategy and Tactics of Pricing, written there as −ΔP ÷ (CM + ΔP). For a price increase i the same formula gives i ÷ (m + i): the share of sales you can lose before profit falls.
The margin after a discount is (m − d) ÷ (1 − d): 10% off a 40% margin leaves 33.33%, not 30%, because the price fell too. When the discount is as large as the margin, each sale only covers its cost and no amount of extra volume brings the profit back.
Quick reference: extra sales needed
- 20% margin: 5% off needs 33% more, 10% off needs 100% more
- 30% margin: 5% off needs 20%, 10% off needs 50%, 20% off needs 200%
- 40% margin: 5% off needs 14%, 10% off needs 33%, 20% off needs 100%
- 50% margin: 10% off needs 25%, 20% off needs 67%, 30% off needs 150%
Comparing promotions on one order
Each offer is applied to the same basket of identical items and compared with that order at full price:
- % off lowers the price of every item.
- A flat coupon comes off the order once it reaches the minimum order value.
- Buy X get Y free: in a basket of n items, ⌊n ÷ (X + Y)⌋ × Y items are free — two items in a buy-1-get-1 basket, one is free.
- Free shipping: you still pay the courier but no longer collect the shipping fee.
Extra orders needed = profit per order at full price ÷ profit per order with the offer − 1. Customer saves is how much less the customer pays for the same order, shipping included. A coupon with a minimum order can also make customers buy more — enter the bigger basket in Items in the order to see that case.
What the formula leaves out
It holds everything else constant: the same cost per unit, no new fixed costs and no change in what else customers buy. A promotion can also pull sales forward from later weeks, teach customers to wait for the next sale, or bring in new customers who come back at full price — effects the formula cannot see. Use the result as the bar the promotion has to clear, then check the real sales against it.
Limitations
- Fixed costs are left out: the volume shown is the break-even on gross profit (contribution), not on net profit.
- The promotion comparison assumes every item in the order has the same price and cost.
- Tax is simplified: everything the customer pays — goods and shipping — is taxed at the one rate you enter.
Privacy
Everything happens in your browser. What you enter or open here is not uploaded or stored by MySmartCoPilot.
Frequently asked questions
How much more do I need to sell to make up for a discount?
Divide the discount by your margin minus the discount: d ÷ (m − d). With a 40% margin, 10% off needs 10 ÷ 30 = 33.33% more units, and 25% off needs 25 ÷ 15 = 166.67% more.
Which margin should I use?
The contribution margin: the price minus the costs that grow with each unit sold (product, packing, payment fee, sales commission), as a share of the price without tax. Do not use a margin that already has rent and salaries taken out — those stay the same when you sell more.
Why does a small discount need so much extra volume?
Because the whole discount comes out of your margin. 10% of the price is a quarter of a 40% margin, so each sale earns 25% less and you need a third more sales to earn the same.
Is a coupon better than a percentage off?
Compare them on the same order: ₹200 off a ₹2,000 order is a 10% discount, but on a ₹1,000 order it is 20%. A minimum order value stops a flat coupon from costing more than you planned.
Can I use it for a price increase?
Yes — choose Price increase. It shows how much volume you can lose before profit falls: i ÷ (m + i). With a 40% margin a 10% increase pays as long as you keep more than 80% of your sales.