Calculator
of discounts
and margins
If you give a 20% discount, how much must sales increase to recover it?
The impact of a discount can be dramatic
Making a discount is the easiest way to increase sales. Sellers do it for many reasons:
- To increase market share – get new customers.
- Get more customers to try the product.
- Introduce a new product.
- Liquidate a stock.
- Generate a significant number of sales in a specific campaign.
The discount is a cost, or a loss (less income) associated with each sale. The more you sell with that discount, the more you stop earning. The more discount you make, the more you will sell (or so you hope), but with less margin.
What happens when you give a discount
If you are going to sell more but earn less, how do you know if you will end up winning or losing?
If you discount in hopes of increasing sales and profiting, how much must sales increase to offset that discount?
For example, if you have a gross margin of 30% and you make a 15% discount, you must double your sales to continue earning the same.
Is it reasonable to think that you will double your sales with a 15% discount?