How many extra sales does a discount need?
A lower price may increase orders while reducing total contribution. Compare both effects before judging a promotion.
Open the Discount Profit Calculator →Compare contribution rather than revenue
A sale can bring in more orders while leaving less money for the business. Work out the amount remaining on an ordinary order and a discounted order using the same costs. Divide the first contribution by the second to find the sales multiplier needed to keep the same total contribution.
For a £20 item with £12 variable costs, an ordinary order contributes £8. A 20% discount brings the price to £16 and leaves £4. You need two discounted orders to replace the contribution from one ordinary order, before considering any extra overhead.
| Discount | Selling price | Contribution | Sales multiplier |
|---|---|---|---|
| 0% | £20 | £8 | 1× |
| 20% | £16 | £4 | 2× |
| 30% | £14 | £2 | 4× |
| 40% | £12 | £0 | No finite match |
Allow for the costs that change during the promotion
The simple discount tool keeps the included cost fixed so the effect is easy to see. In a real promotion, some percentage fees may fall with price, while fixed order charges, product cost and postage remain. Use the full product calculator when those differences matter.
Include any extra advertising, gift wrapping or promotional insert that accompanies the offer. If customers add more items to a basket, compare that complete order too. The result should describe the actual offer you plan to run.
Check whether the business can fulfil the extra orders
Twice as many orders can mean twice as much packing and customer administration, even if making happens in batches. Before setting a target, compare the required order count with stock, labour and dispatch capacity. An offer that creates a backlog may bring costs that are absent from the first calculation.
After the promotion, review total contribution, not just the increase in sales. Keep the comparison period and cost basis consistent. A small test with a clear record is more useful than assuming a larger order count will pay for the discount.
A worked example
£20 price and £12 variable costs leave £8. A 20% discount makes the price £16 and contribution £4, requiring twice as many sales to match the original contribution.
Before you use the result
- Calculate ordinary and discounted contribution.
- Include the actual promotional extras.
- Use the full fee-aware tool where percentage charges change.
- Check the required volume against stock and time.
- Compare total contribution after the promotion.
Common questions
What if the discounted order contributes nothing?
If contribution is zero, no number of those orders replaces positive contribution from ordinary sales. A negative contribution makes the loss grow with each additional order under the entered assumptions.
Is the multiplier a sales forecast?
It is a required volume comparison, not a prediction that buyers will place those orders. Actual demand needs testing, and the extra volume must still fit the business's capacity.
Put the numbers into practice
Discount Profit Calculator →How discounts affect percentage fees and product profit →How to price and plan a busy selling season →How much can you spend to acquire a product order? →A practical calculation guide, not professional accounting, legal or tax advice. Examples are illustrative unless identified as official. Calculation methodology and limitations.