Breakdown
How it works
A discount reduces the contribution per unit, so volume must rise by more than the discount percentage to stand still. The lower your margin, the more volume you need: a 10% discount on a 20% margin needs 100% more units. Price rises work the other way — you can lose a surprising amount of volume and still make more money.
Formula
Worked example
Price 100, cost 60, 1,000 units, 10% discount: margin falls from 40 to 30 → need 1,333 units (+33%) for the same profit.
Frequently asked questions
Why do promotions rarely pay back?
Because the required uplift is large, part of the uplift is pulled-forward demand, and some buyers would have paid full price.
When is discounting rational?
Clearing perishable or obsolete stock, acquiring customers with high lifetime value, or filling fixed capacity (hotels, airlines) where variable cost is tiny.
How do I test a price increase?
Raise prices on a segment or new customers first; measure volume loss against the break-even loss the calculator shows.