Profit margin calculator, and what a discount does to it
Price and cost give your margin and markup. Add a discount to see the margin it leaves and the extra sales it needs to pay for itself.
Off the selling price. Leave at 0 for margin only.
Example numbers. Replace them with yours.
How it's worked out
- Gross margin is profit as a share of the price; markup is the same profit as a share of the cost. A $100 item that costs $60 makes $40: two fifths of the price, two thirds of the cost.
- A discount comes straight off that profit. Take $10 off the same item and $30 is left.
- To earn the same gross profit you need the old profit divided by the new one in units: $40 ÷ $30 is a third more sales.
- Business Victoria's break-even table gives the same answer: 10% off at a 30% gross margin needs 50% more units to keep gross profit level.[Business Victoria (Victorian Government), Sep 2022] (opens the source)
What Benson does
Benson measures discount depth in coupon-extension sessions, next to their conversion rate and order value, so you can see which discounts extensions add.
Questions
Read next
Sources
- 1Business Victoria (Victorian Government), “Develop discount strategies”, Sep 2022. business.vic.gov.au (opens the source)
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