Discount Profit Calculator
See what a discount does to your margin, and the maximum discount you can afford.
A 25% discount does not cut your profit by 25%. Because your costs stay the same while your revenue falls, the profit reduction is usually two to four times the discount percentage. This calculator shows the real effect and the maximum discount you can afford.
Price, cost and discount
Result
Fill in the fields above and your result will appear here.
What the Discount Profit Calculator does
Discounts are subtracted from revenue, but nothing about your cost structure changes. The product still costs the same to buy, ship and pack, and the commission falls only in proportion to the lower price. Everything else comes out of margin.
The volume figure makes this concrete: if a discount halves your profit per order, you need twice the sales just to stand still. Marketplace sale events rarely deliver that, which is why discounting into a sale often reduces total profit even when it increases revenue.
How to use this tool
- Enter the listed price before discount, including GST.
- Enter the discount you are planning, or the one a marketplace event requires.
- Enter your product cost, commission percentage and fixed cost per order.
- Set the minimum margin you are willing to accept — the tool uses it to find your maximum affordable discount.
- Read the volume multiplier: it tells you how much extra you would need to sell to end up where you started.
Formula and method
Discounted price = Listed price × (1 − Discount %)
Net revenue = Discounted price ÷ (1 + GST)
Profit = Net revenue − Commission − Fixed costs − COGS
Volume needed to hold total profit
= Profit at full price ÷ Profit after discount
Break-even discount: the discount at which profit reaches zero.
Worked example
Example: ₹1,499 product at 25% off
| Profit at ₹1,499 | ₹465 |
| Profit at ₹1,124 | ₹188 |
| Fall in profit | 60% |
| Volume needed to match | 2.5× |
A 25% discount cuts profit by 60% and would need two and a half times the volume to break even on total profit. That is a demanding target for most sale events.
What your result means
The volume multiplier is the test of whether a discount makes sense. If the event realistically triples your volume, a 2.5× requirement is fine. If it lifts volume by 40%, the discount destroys profit.
The maximum affordable discount is the number to take into a marketplace event negotiation. Many events have minimum discount requirements — if yours exceeds this figure, participating costs you money.
The break-even discount is the absolute floor. Beyond it, higher sales make your losses larger.
Important considerations
- Marketplace commission is charged on the discounted price, so the fee falls with the discount. That partial relief is already included here.
- Discounts can permanently reset customer price expectations. A product on sale continuously is simply priced lower.
- Deep discounting to clear ageing inventory can still be correct when storage fees or obsolescence cost more than the loss on each unit.
- Coupon-based discounts allow targeting; a listing-wide price cut applies to buyers who would have paid full price. The economics differ sharply.
- Some sale events fund part of the discount from the marketplace side. Enter only the portion you actually bear.
Limitations of this tool
- It does not model the demand response to a discount — how much extra volume it actually generates is a business judgement.
- It assumes fixed costs stay constant per order. At high volume, negotiated shipping rates may reduce them.
- Cross-selling and repeat purchase from discount-acquired customers are not counted.
Frequently asked questions
How much discount can I afford to give?
It depends on your margin at full price. A product with 30% margin usually cannot go beyond about 15–18% discount before profit disappears. The maximum figure above computes it exactly from your numbers.
Why does a 25% discount cut profit by 60%?
Because costs do not fall with price. Your product cost, shipping and packaging stay identical while revenue drops, so the entire reduction comes out of the margin — which is only a fraction of the price to begin with.
Should I join a marketplace sale event?
Compare the event's required discount against your maximum affordable discount. If the requirement is higher, participating loses money on every order unless the volume lift is extraordinary or the marketplace funds part of it.
Is a coupon better than a price reduction?
Usually yes, because a coupon can be targeted at buyers who need the incentive, while a listing price cut is given to everyone including those who would have paid full price.