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You cut your prices to pull people in, and now you need customers more just to earn what you did before.
If I give a 20% discount, how many more customers do I need to make the same profit?
To earn the same profit after a discount, your sales must grow by the discount divided by your margin minus the discount. With a 40% margin, a 20% discount means you need twice as many customers just to stand still. If the discount is as big as your margin or bigger, no number of extra customers can make up for it.
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Change any number below: the result updates while you type.
This is how much busier you must get just to keep the same money in your pocket.
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Continue with my numbers Free · no card · 20 messages a dayHow it is calculated
- Find your margin: take what you sell an item for, subtract what the item costs you, then divide by the selling price.
- Take the discount away from your margin. What is left is what you still keep on each sale after the discount.
- Divide the discount by what is left. This tells you how much your sales must grow.
- Multiply that growth by the customers you have now to find how many extra customers you need.
- Add the extra customers to your current ones to see the total you must reach each month.
- How much your sales must grow = Discount you plan to give ÷ (Your margin: the share of each sale you keep after paying for the goods or materials - Discount you plan to give) × 100
- Extra customers you need each month = Customers (or sales) you have now in a normal month × Discount you plan to give ÷ (Your margin: the share of each sale you keep after paying for the goods or materials - Discount you plan to give)
- Total customers you need each month with the discount = Customers (or sales) you have now in a normal month + Customers (or sales) you have now in a normal month × Discount you plan to give ÷ (Your margin: the share of each sale you keep after paying for the goods or materials - Discount you plan to give)
An example
Your margin: the share of each sale you keep after paying for the goods or materials: 40 % · Discount you plan to give: 20 % · Customers (or sales) you have now in a normal month: 100 customers.
Result: How much your sales must grow: 100 % · Extra customers you need each month: 100 customers · Total customers you need each month with the discount: 200 customers.
Worth keeping in mind
- If the discount is equal to or bigger than your margin, you lose money on every sale and more customers will not fix it.
- Check your own margin from your own prices and costs before you decide on any discount.
- The count assumes each customer buys the same amount as before and your costs per item stay the same.
- Customers who would have paid full price anyway also get the discount, so they cost you money too.
- Small changes in the discount make a big difference: try a smaller discount and compare the numbers.
Sources
Text drafted with the assistance of artificial intelligence, from the sources listed, and checked against the worked example. It is a tool for orientation: for tax or contractual decisions, your accountant has the last word.
How this page came about
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- It looked for the sources and opened them one by one: the ones that do not answer never get in.
- It wrote the formulas and tried them on a worked example: if the maths does not add up, the page never goes out.
- It laid the page out and put it online all by itself, with nobody touching a key.
It is the same work it does for the people who use it: you say what you need in plain words, and it gets done while you are doing something else. A page like this one, on your own numbers, included.
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