Discount Code Profit Impact Calculator
A 20% off code feels harmless until you look at what it does to margin per unit. This shows your real profit after the discount, and exactly how much extra sales volume you'd need just to break even against not discounting at all.
What your result means
The calculator shows your profit per unit after the discount, and how much extra sales volume you'd need to make the same total profit as selling at full price.
That second number is the real test of a promotion. If the discount won't realistically bring in that many extra sales, it costs you money, even if revenue goes up.
How the discount formula works
Discounted price = Price × (1 − Discount %) Profit per unit after = Discounted price − COGS Break-even sales increase = (Profit before ÷ Profit after − 1) × 100
- Price
- regular selling price per unit
- COGS
- cost of the unit
- Profit before
- Price − COGS
Margin after the discount is profit per unit after ÷ discounted price. The guide to discount formulas in Excel shows how to run these in a spreadsheet.
Worked example
Worked exampleExample numbers
These match the calculator's default inputs.
| Input | Value |
|---|---|
| Regular price | $50 |
| COGS | $20 |
| Discount | 20% |
- Discounted price = $50 × (1 − 0.20) = $40
- Profit per unit: before = $50 − $20 = $30; after = $40 − $20 = $20
- Break-even sales increase = ($30 ÷ $20 − 1) × 100 = 50%
A 20% discount on this product needs 50% more units sold just to match full-price profit. Margin falls from 60% to 50%.
How to discount without losing money
- Discount products with high margins, where the cut is a smaller share of profit.
- Set a minimum order value on the code, so the discount comes with a bigger basket.
- Use bundles instead of sitewide codes. A bundle discount can move slow stock while protecting best-sellers. See the bundle discount calculator and the guide to product bundling.
- Time-limit and target codes to new customers or lapsed ones, rather than giving full-price buyers money off.
- Measure the lift. Compare units sold against a similar period without the code before running it again.
Common mistakes
- Comparing the discount with revenue, not profit. A 20% discount sounds like 20% less revenue, but it takes a much bigger share of profit.
- Counting all sales during the promotion as extra. Many customers would have bought anyway. Only the extra units above normal sales help you break even.
- Forgetting the sales slump afterwards. Promotions can pull purchases forward from the following weeks. Look at sales before, during and after.
- Using the same discount on every product. Low-margin products need a far bigger sales lift to break even. The guide to discount formulas in Excel has a table of break-even lifts by margin.
- Letting codes stack. If a sitewide sale and a code can combine, the real discount may be much deeper than planned.
FAQ
Why does a 20% discount need more than 20% more sales?
Because the discount comes entirely out of your profit, not out of the price as a whole. On a product with $30 profit on a $50 price, a $10 discount cuts profit by a third, so you need 50% more sales just to earn the same total.
What does 'Never at this discount' mean?
The discount is so deep that you make no profit, or a loss, on every unit. No amount of extra volume can make that up.
Does this include shipping or fees?
No. It uses price and COGS only. If you pay shipping or payment fees per unit, add them to COGS for a more accurate result.