Discount break-even sales calculator
How many more units you have to sell so a discount does not leave you worse off.
≈ 3 minutes
Work out the sales I need
The maximum discount you can afford
Before announcing a discount it helps to know where the floor is. This calculator solves for the lowest price that still leaves the margin you decided to keep, and turns it into the maximum percentage you can cut from your normal price. If the result is zero or negative, you are already selling below your target.
Every calculation runs in your browser. The figures you type are never sent to a server and are never stored.
Your results will appear here
Enter your normal price, your variable costs and the margin you want to keep.
- Usual selling price
- Variable costs per unit
- Channel fee and target margin
Calculation results
Maximum applicable discount
—
The most you can cut without falling below your target margin.
Maximum discount—As an amount
Minimum price—The lowest that respects your target
Profit at minimum price—
Margin at minimum price—
Profit at regular price—
Margin at regular price—
See the breakdown
| Regular price | — |
| Variable costs | — |
| Minimum price | — |
| Theoretical discount | — |
| Applicable discount | — |
| Current profit | — |
Recommended next step
You know how far you can cut. What is missing is whether it pays: a discount cuts margin per unit, so you have to sell more just to stand still.
Work out the sales I would needResults are estimates based on the information you enter. Fees, taxes and platform terms can change: always check the figure that matters to you against your invoice or the official platform. They do not replace your real invoices, your official accounts or professional tax, financial or legal advice.
What this tool works out
This maximum profitable discount calculator works backwards from intuition. Instead of cutting the price and seeing what happens to the margin, it fixes the margin you want to keep first and solves for the lowest price compatible with it.
That minimum price, compared against your normal price, is the maximum discount. Anything you offer beyond it comes out of your margin target, not out of some imagined fat in the price.
Margin is not markup
Margin is profit as a percentage of the selling price. Markup is the same profit as a percentage of cost. They are not interchangeable and confusing them breaks any pricing calculation.
A product costing $50 and selling at $100 has a 50 % margin and a 100 % markup. Here the target margin you enter is always read against the selling price, which is what makes it solvable with a division.
How the formula works
The fee and the target margin are both percentages of price, so they are grouped into a single denominator.
denominator = 1 - fee %/100 - target margin %/100
minimum price = variable costs / denominator
maximum discount = (1 - minimum price / normal price) x 100
discount amount = normal price - minimum price
profit at the minimum price
= minimum price x (1 - fee %/100) - variable costs
That denominator is the share of the price left after the fee and the margin you set aside. It is all that remains to pay the variable costs.
A worked example
A product selling at $80, with $35 of variable costs and a 10 % channel fee. The store wants to keep a 20 % margin on the selling price even during the promotion.
| Item | Value |
|---|---|
| Normal price | $80.00 |
| Variable costs per unit | $35.00 |
| Target margin | 20.00% |
| Compatible minimum price | $50.00 |
| Maximum discount | 37.50% |
| Maximum discount amount | $30.00 |
| Profit at the minimum price | $10.00 |
| Current margin | 46.25% |
The minimum price is $50, so the maximum discount is 37.5 %: $30 off the normal price. At that minimum price the product leaves $10 of profit, the 20 % target. Today, at $80, it leaves $37 and a 46.25 % margin: plenty of cushion for an aggressive promotion.
When the target is impossible
If the fee plus the target margin reach 100 % or more, the denominator is zero or negative and no price exists that meets the target. With a 30 % fee and a 70 % target margin, nothing is left to pay for the product: not even charging a thousand gets you there.
The calculator warns instead of returning an absurd number. The fix is not in the price but in the target: lower the margin you are asking for, or change channel.
Theoretical discount and effective discount
The theoretical maximum discount can come out negative, and that is information too: it means your normal price is already below the price you would need to meet your margin target. It is not that you cannot discount; you are already discounting without knowing it.
The effective discount is the same number floored at zero, because you cannot offer a negative discount. When the two differ, the conclusion is not about the promotion but about the list price.
Comparing the current margin against the margin at the minimum price sizes the decision: it tells you how much cushion you have today and how much would remain if you applied the full discount.
What to decide next
Knowing how much you can discount says nothing about whether you should. A discount cuts margin per unit, so you have to sell more units just to stand still: how many more is the next question, and it has an exact answer.
What this assumes
- Target margin is expressed on the selling price, not on cost
- Variable costs per unit do not change with the discount
- The channel fee is a percentage of the price charged
- Price is expressed without indirect taxes
- The discount applies to the normal price you entered
What it does not cover
- How many more units you would need to sell, calculated separately
- The effect of discounting on how your brand is perceived
- Tiered or volume-based discounts
- Flat per-transaction fees
- Fixed costs, which do not change with the promotion
Frequently asked questions
Is the target margin on price or on cost?
On the selling price. If you think in markup, convert first: a 100 % markup equals a 50 % margin. Entering a markup as if it were a margin produces a minimum price lower than the one you need.
Which variable costs do I enter?
Everything that depends on selling that unit: product, packaging, shipping you absorb, pick and pack, and returns provision. The channel fee goes separately in its own field, because it is a percentage of price and moves when the price moves.
Why is the fee not added to variable costs?
Because it is not a fixed amount: cut the price and the fee falls too. Treating it as a fixed cost per unit would give the wrong minimum price. That is why it belongs in the denominator alongside the target margin.
What does a negative maximum discount mean?
That your current price is already below the one you would need to meet your margin target. There is no room for a promotion because you are already promoting by accident: the problem is the list price, not the discount.
When does the calculator say the target is impossible?
When the fee plus the target margin reach 100 %. At that point nothing is left of the price to pay for the product, and no price however high meets the target. The fix is lowering the margin you ask for or selling through a cheaper channel.
Can I just apply the maximum discount?
You can, but you will land exactly on your target margin with no cushion for surprises. If returns or shipping costs rise during the promotion you drop below it. Leaving a couple of margin points spare is prudent.
Does it work for a volume discount?
It works for the resulting unit price. If you sell five units at 20 % off, check that the discounted unit price still sits above the minimum. What it does not capture is the saving from shipping five units in one order.
What should I work out after this?
How many more units you would have to sell to offset the discount. Being able to cut 37 % does not mean it pays to: the volume required is usually higher than intuition suggests.
Official sources
Shopify — break-even analysis and contribution marginhttps://www.shopify.com/blog/break-even-analysis
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