A 10% price discount can reduce profit by 33%, 50% or even 100% — depending on your current margin. Use the calculators below to know exactly the impact before offering any discount.
Enter the original price and discount percentage to see the new price and savings.
Enter cost, selling price and discount to see the real effect on your profitability.
Set the cost, selling price and minimum acceptable margin to find out how far you can discount without compromising your profitability.
Fill in cost, selling price and your desired minimum margin.
Fill in the Maximum Discount Calculator above to see the impact of different discount percentages on your margin.
The logic seems simple: a 10% discount = a 10% reduction in profit. But that's not how it works. The discount applies to the selling price, while profit represents only a portion of that price. When you discount 10%, you lose a slice of profit, not 10% of it.
Product with a $80 cost, sold for $100 (20% margin, profit = $20).
10% discount: new price = $90. New profit = $90 − $80 = $10.
Profit reduction: $10 lost out of $20 = 50% of profit eliminated by a discount of just 10%.
Using the formula: 10% ÷ 20% = 50% ✓
| Current margin | 5% discount | 10% discount | 15% discount | 20% discount |
|---|
Values show the percentage reduction in profit. In red: the discount causes a loss.
A discount is financially justified when it drives enough of a volume increase to offset the drop in margin. The equation is:
Extra volume = 10% ÷ (30% − 10%) = 10% ÷ 20% = 50% more units.
In other words: with a 30% margin, a 10% discount only pays off if you sell at least 50% more. If you sell less than that, the promotion generated a net loss.
A gift with an $8 cost feels more valuable to the customer than a $10 discount on the price. You preserve the reference price of the main product.
Free shipping converts better than an equivalent price discount. You absorb the real shipping cost, but you don't destroy the product's reference price.
A 10% discount on a 3-unit bundle increases average order value while keeping the unit price intact. The margin drops, but total profit per transaction rises.
The customer perceives the benefit, but the real cost to you is lower — and they only redeem it on a future purchase, driving retention without sacrificing today's margin.