Extra volume needed to justify a discount. The Discount Impact Calculator takes current price, variable cost per unit, discount offered and returns extra volume needed to keep the same profit plus profit per unit after the discount, profit per unit today, margin after the discount. Results update as you type, and the formula is shown under the result so you can repeat it in your own spreadsheet.
Good business decisions come from putting numbers on the options before committing. Run the calculation with your best estimate, then again with a pessimistic one, and see whether the decision survives both. Use the worked example below to check the maths against your own figures.
How the Discount Impact Calculator works
A 15% discount on a 40% margin product cuts profit per unit from $40 to $25, so you need 60% more sales just to stand still. Discounts are far more expensive than they look.
Worked example
With the example values (current price of $100, variable cost per unit of $60, discount offered of 15%), the extra volume needed to keep the same profit is 60%; profit per unit after the discount $25.00, profit per unit today $40.00, margin after the discount 29.41%. Change any figure above and the result updates immediately; use Copy results to paste the summary into a note or email.
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Frequently Asked Questions
How is extra volume needed to keep the same profit calculated?
extra volume = profit per unit before ÷ profit per unit after − 1.
Which figures do I need?
Current price, variable cost per unit, discount offered. Take them from the same period and the same set of accounts or reports so the ratio is consistent, and check the example values as a guide to the units expected.
How reliable is the result?
As reliable as the estimates you enter. Run the calculation with optimistic and pessimistic inputs to see the range of outcomes before deciding.
