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Discount Impact Calculator: Calculate discount impact calculator in Seconds

Calculate impact of discounts on profit. See true cost of sales. This tool helps you calculate, understand, and optimize this metric for your business.

By Veira Retail Expert, Retail Advisor at VeiraPublished June 2024Updated June 2024
Calculator
Result
You must sell 1.50x the units to make the same profit
Normal priceKES 1,000
Price after 10% offKES 900
Profit per unit beforeKES 300
Profit per unit afterKES 200
Profit lost per unit33.3%
Sales volume needed to break even on the discount1.50x

A 10% price cut is not a 10% profit cut. It takes 33% of your profit per unit, so the promotion only pays if it lifts volume by 50% or more.

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A price cut is not a proportional profit cut

Discounts come off the selling price but not off the cost price, so they come entirely out of profit. On a product with a 30% margin, a 10% discount removes about a third of the profit on every unit sold.

That is why the volume question matters. A promotion only pays if it lifts units enough to replace the profit it gives away, and this calculator shows the multiple you need.

Before you run the promotion

Check the discount against the cost price first, because deep discounts on thin-margin lines can sell below cost without anyone noticing until the month closes.

Consider whether the promotion brings new customers or simply gives a discount to people who would have paid full price. The second kind is common and is pure cost.

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Worked examples

KES 1,000 item costing KES 700, 10% off
  • New price KES 900
  • Profit falls from KES 300 to KES 200
  • A 10% price cut is a 33% profit cut
  • You need 1.5x the units to stand still

Frequently asked questions

Why does a small discount cost so much profit?
Because the discount comes off the selling price but not off the cost price, so it comes entirely out of profit. On a 30% margin, a 10% discount removes about a third of the profit per unit.
How much extra volume does a discount need?
Enough to replace the profit given away. The calculator shows the multiple, and on thin margins it is frequently more than doubling, which most promotions do not achieve.
Can a discount sell below cost without me noticing?
Easily, on thin-margin lines. Check the discounted price against cost before the promotion runs rather than at month end.
Are discounts ever worth it?
When they clear stock that is about to expire or tie up cash, when they win a customer who returns, or when the lost profit buys genuine footfall. They are not worth it when they mostly discount people who would have paid full price.

Doing this by hand every time? Veira runs the same calculation automatically on every sale, no spreadsheet required.

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