Discount Margin Calculator
A discount margin calculator shows what a sale does to your profit. Enter your price, your cost, and the discount you plan to run.
You still make money on each sale, but less than the 30% you want.
- Sale price
- $48.00
- Profit per sale
- $12.00
- Margin at the sale price
- 25%
- Maximum safe discount
- 14.2%
- Break-even discount
- 40%
- Extra sales needed to match full-price profit
- 100% more
Margin is gross margin on the discounted price. Shipping, payment fees, and ad spend are not included.
How to use it
- Enter the price you sell the product for today.
- Enter what one unit costs you.
- Enter the percent off you plan to run.
- Enter the lowest margin you are willing to keep.
What each number means
Margin at the sale price. Your profit on one sale, as a share of the discounted price.(sale price - cost) / sale price
Maximum safe discount. The deepest discount that still keeps your minimum margin.1 - cost / (price x (1 - minimum margin))
Break-even discount. The discount at which the sale price equals your cost.1 - cost / price
Extra sales needed. How many more units you have to sell at the discount to earn the same total profit as at full price.full-price profit / sale profit - 1
A worked example
A product sells for $60 and costs $36. At full price you make $24, a 40% margin.
At 20% off, the price drops to $48. Your cost is still $36, so you make $12, a 25% margin. The discount was 20%, but your profit on each sale fell by half.
If you want to keep at least a 30% margin, the most you can take off is 14.2%. You break even at 40% off. To earn the same total profit at 20% off, you need to sell twice as many units.
When you have more than one product
This page checks one product at a time. A store-wide sale puts the same discount on products with very different costs, and the ones with thin margins are easy to miss.
PromoMath is a Shopify app that runs this same check on every variant in your store at once. It reads the price and Cost per item you already have in Shopify and sorts each variant into Safe, Low margin, Losing money, or Missing cost.
$9/month. 7-day free trial.
Questions
How do I calculate profit margin after a discount?
Take the discounted price, subtract your cost, and divide by the discounted price. A $60 product that costs $36 and sells at 20% off goes for $48. The profit is $12, and $12 divided by $48 is a 25% margin. At full price the same product had a 40% margin.
What is a break-even discount?
The break-even discount is the percent off at which your sale price equals your cost, so you make nothing on the sale. It is 1 minus cost divided by price. A $60 product that costs $36 breaks even at 40% off. Any deeper and each unit sold loses money.
How do I find the maximum discount I can afford?
Decide the lowest margin you will accept, then use 1 minus cost divided by (price times 1 minus that margin). For a $60 product that costs $36 and a 30% minimum margin, the maximum discount is 14.2%. This calculator rounds that number down so it never overshoots.
How many more sales do I need to make up for a discount?
Divide your profit per unit at full price by your profit per unit at the sale price, then subtract 1. If you make $24 at full price and $12 on sale, you need to sell 100% more units, which is twice as many, to earn the same total profit.
Why does a 20% discount cut my profit by more than 20%?
The discount comes off the price, but your cost stays the same, so all of it comes out of profit. On a $60 product that costs $36, a 20% discount takes $12 off the price and cuts profit from $24 to $12. That is a 50% drop in profit.
Is margin the same as markup?
No. Margin is profit divided by the selling price. Markup is profit divided by cost. A $60 product that costs $36 has a 40% margin and a 66.7% markup. This calculator uses margin.
Does this calculator save my numbers?
No. The math runs in your browser. Nothing you type is saved or sent anywhere.