Discount Calculator
See what a discount really costs in margin, and what the price must be to give one without losing money.
A discount comes straight out of the margin, because the cost does not fall when the price does. Twenty percent off a price at a sixty percent margin does not take twenty percent off the profit, it takes a third of it. This calculator shows the discounted price, the profit that survives, the margin that remains and the sales increase needed to come out level. It is the tool to use before a sale rather than after one.
At a glance
- What you enter
- Original price, Cost per unit, Discount, Units you would sell without the discount, Units you expect to sell with the discount, Margin you want to keep, Selling fees on the discounted price
- What you get
- Discounted price, Profit at the original price, Profit at the discounted price after fees, Margin at the original price, Margin at the discounted price, Margin lost, Profit lost per unit, Profit lost as a share of the original profit, Original profit as a multiple of the discounted profit, Sales increase needed to come out level, Units needed at the discounted price, Revenue at the full price, Profit at the full price, Profit at the discounted price and volume, Change in profit against the full price plan, The sale improves total profit, Discount that wipes out the profit, Discount that still leaves the target margin, Two item bundle price at the same margin, Customer saving on the equivalent bundle
- Formula shown
- Yes, every step, right below your results.
- Cost and privacy
- Free, no account needed, and nothing you type is stored.
See worked examples ↓ Read the FAQ ↓ Share this calculator ↓
Results are estimates for general information only, always verify with a professional or official source before acting on them.
How to use the Discount Calculator
- 1 Enter Original price
- 2 Enter Cost per unit, The full cost, including materials, labour and overhead.
- 3 Enter Discount (%)
- 4 Enter Units you would sell without the discount
- 5 Enter Units you expect to sell with the discount
- 6 Enter Margin you want to keep (%), Optional. The discount that still leaves this margin is reported.
- 7 Enter Selling fees on the discounted price (%), Marketplace commission and processing, which come off the discounted price and make the margin fall further.
- 8 Press Calculate. You get Discounted price, Profit at the original price, Profit at the discounted price after fees, Margin at the original price, Margin at the discounted price, Margin lost, Profit lost per unit, Profit lost as a share of the original profit, Original profit as a multiple of the discounted profit, Sales increase needed to come out level, Units needed at the discounted price, Revenue at the full price, Profit at the full price, Profit at the discounted price and volume, Change in profit against the full price plan, The sale improves total profit, Discount that wipes out the profit, Discount that still leaves the target margin, Two item bundle price at the same margin, Customer saving on the equivalent bundle, and every intermediate step stays visible under "How is this calculated?"
- 9 Change one number at a time to see what moves the result, that is usually the most useful thing a calculator can tell you.
Worked examples
Real numbers run through this calculator. Open any example to load it into the form above and change it.
Twenty percent off a hundred dollar item
A cost of forty dollars and no selling fees.
You enter
- Original price
- $100.00
- Cost per unit
- $40.00
- Discount
- 20%
- Units you would sell without the discount
- 20
- Units you expect to sell with the discount
- 20
- Margin you want to keep
- 0%
- Selling fees on the discounted price
- 0%
You get
- Discounted price
- $80.00
- Profit at the original price
- $60.00
- Profit at the discounted price after fees
- $40.00
- Margin at the original price
- 60.0%
- Margin at the discounted price
- 50.0%
- Margin lost
- 10.0%
- Profit lost per unit
- $20.00
- Profit lost as a share of the original profit
- 33.3%
- Original profit as a multiple of the discounted profit
- 1.50
- Sales increase needed to come out level
- 50.0%
- Units needed at the discounted price
- 30
- Revenue at the full price
- $2,000.00
- Profit at the full price
- $1,200.00
- Profit at the discounted price and volume
- $800.00
- Change in profit against the full price plan
- $-400.00
- The sale improves total profit
- 0
- Discount that wipes out the profit
- 60.0%
- Discount that still leaves the target margin
- 60.0%
- Two item bundle price at the same margin
- $200.00
- Customer saving on the equivalent bundle
- $0.00
The profit falls from 60.00 to 40.00 and the margin from 60 percent to 50 percent. Fifty percent more sales are needed just to stand still.
The same sale on a fees charging platform
A 15 percent commission on the discounted price.
You enter
- Original price
- $100.00
- Cost per unit
- $40.00
- Discount
- 20%
- Units you would sell without the discount
- 20
- Units you expect to sell with the discount
- 26
- Margin you want to keep
- 40%
- Selling fees on the discounted price
- 15%
You get
- Discounted price
- $80.00
- Profit at the original price
- $60.00
- Profit at the discounted price after fees
- $28.00
- Margin at the original price
- 60.0%
- Margin at the discounted price
- 35.0%
- Margin lost
- 25.0%
- Profit lost per unit
- $32.00
- Profit lost as a share of the original profit
- 53.3%
- Original profit as a multiple of the discounted profit
- 2.14
- Sales increase needed to come out level
- 114.3%
- Units needed at the discounted price
- 43
- Revenue at the full price
- $2,000.00
- Profit at the full price
- $1,200.00
- Profit at the discounted price and volume
- $728.00
- Change in profit against the full price plan
- $-472.00
- The sale improves total profit
- 0
- Discount that wipes out the profit
- 60.0%
- Discount that still leaves the target margin
- 33.3%
- Two item bundle price at the same margin
- $200.00
- Customer saving on the equivalent bundle
- $0.00
The commission takes another 12.00 of the discounted price, so the profit falls to 28.00 and 26 units still make less than 20 did.
A discount designed around a target margin
Finding the discount that still leaves a 40 percent margin.
You enter
- Original price
- $100.00
- Cost per unit
- $40.00
- Discount
- 20%
- Units you would sell without the discount
- 20
- Units you expect to sell with the discount
- 30
- Margin you want to keep
- 40%
- Selling fees on the discounted price
- 0%
You get
- Discounted price
- $80.00
- Profit at the original price
- $60.00
- Profit at the discounted price after fees
- $40.00
- Margin at the original price
- 60.0%
- Margin at the discounted price
- 50.0%
- Margin lost
- 10.0%
- Profit lost per unit
- $20.00
- Profit lost as a share of the original profit
- 33.3%
- Original profit as a multiple of the discounted profit
- 1.50
- Sales increase needed to come out level
- 50.0%
- Units needed at the discounted price
- 30
- Revenue at the full price
- $2,000.00
- Profit at the full price
- $1,200.00
- Profit at the discounted price and volume
- $1,200.00
- Change in profit against the full price plan
- $0.00
- The sale improves total profit
- 0
- Discount that wipes out the profit
- 60.0%
- Discount that still leaves the target margin
- 33.3%
- Two item bundle price at the same margin
- $200.00
- Customer saving on the equivalent bundle
- $0.00
A 40 percent margin needs a price of 66.67, so the largest discount is 33.33 percent, and at 30 units the sale does improve the total profit.
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Frequently asked questions
Why does a 20 percent discount cost more than 20 percent of my profit?
Because the cost does not move. On a hundred dollar item costing forty dollars the profit is sixty. Twenty percent off takes twenty dollars off the price, so the profit falls to forty, which is a third of it. The discount comes entirely out of the margin, which is why the margin falls faster than the discount rises and why thin margin products cannot be discounted at all.
How much more do I need to sell to justify a discount?
The original profit divided by the new profit, minus one. If the profit falls from sixty to forty, the answer is fifty percent: half again as many sales just to make the same money. Most sales do not increase volume by half, which is why discounting usually reduces total profit even when the revenue goes up. This calculator reports the figure so the assumption behind a sale can be tested.
What is the biggest discount I can give?
The margin, at most, because a discount equal to the margin brings the profit to zero and a larger one sells below cost. On a sixty percent margin the ceiling is sixty percent off, and that sells the item for nothing above its cost, which means the labour was free. In practice the sensible ceiling is a discount that leaves a margin you can live with, which this calculator reports for whatever margin you enter.
Is a bundle better than a discount?
Usually yes. A bundle raises the average order value without cutting the margin on any single item, because the second item carries its own margin. Ten percent off a two item bundle costs far less margin than ten percent off a single item at twice the quantity, and the customer sees a comparable saving. Free shipping over a threshold does something similar with the shipping cost rather than the margin.
When is discounting the right thing to do?
When the stock is genuinely end of line, when a seasonal window is closing, when a material is about to be discontinued, or when a large order justifies a trade price. In those cases the alternative to a discount is no sale at all, and a smaller profit beats dead stock. What is not a good reason is a quiet month, because a discount that does not bring new customers simply trains the existing ones to wait for the next sale.
Terms used here
Short, plain-language definitions of the words this calculator uses.