Think LauncherGuides · 22 October 2026
How much more do you need to sell to make a discount worth it?
A discount only pays off if it brings in enough extra sales to make up for the profit you give up on every order. Most of your costs stay the same when the price drops, so the sales needed are usually much higher than the discount suggests. Here is a worked example you can follow with a calculator.
The product
| Item | Amount |
|---|---|
| Selling price | $50.00 |
| Your cost per item | $20.00 |
| Payment fee | 2.9% + $0.30 |
| Returns and refunds | 5% of revenue |
Shipping is left out to keep the example simple. If you absorb shipping, put it in your fixed costs and the effect gets bigger. The guide on pricing with free shipping shows how.
Profit per sale at full price
- Payment fee: $50 × 2.9% + $0.30 = $1.75
- Returns allowance: $50 × 5% = $2.50
- Profit: $50 − $20 − $1.75 − $2.50 = $25.75, a margin of 51.5%
What each discount does to profit per sale
| Discount | Sale price | Profit per sale | Profit lost per sale |
|---|---|---|---|
| 0% | $50.00 | $25.75 | n/a |
| 10% | $45.00 | $21.15 | 17.9% |
| 20% | $40.00 | $16.54 | 35.8% |
| 30% | $35.00 | $11.94 | 53.7% |
| 40% | $30.00 | $7.33 | 71.5% |
| 50% | $25.00 | $2.73 | 89.4% |
Amounts are rounded to the nearest cent. A 30% discount takes more than half of the profit on every order, not 30%, because the $20 product cost does not get cheaper.
How many extra sales you need
The formula is simple:
Sales needed = profit per sale at full price ÷ profit per sale at the discounted price
If you sell 100 units a month at full price, you earn 100 × $25.75 = $2,575. To earn the same $2,575 with a discount, you need:
| Discount | Units needed | Extra sales needed |
|---|---|---|
| 10% | 122 | about 22% more |
| 20% | 156 | about 56% more |
| 30% | 216 | more than double (about 116% more) |
| 40% | 352 | about 251% more |
| 50% | 945 | about 845% more |
At 30% off you would have to sell 216 units to earn what 100 units earned at full price. At 50% off, you would need nearly ten times as many.
Why it happens
Only two of your costs shrink when the price falls: the percentage part of the payment fee and the returns allowance. The product cost, and any fixed payment fee, stay where they are. So nearly every dollar of discount comes out of your profit.
Check it for your own products
- Work out your profit per sale at full price: price minus product cost, shipping, payment fee and returns allowance.
- Work out your profit per sale at the discounted price with the same costs.
- Divide the first by the second. That is how many times your sales must grow to break even on the discount. Subtract 1 to get the extra sales needed as a percentage.
- Ask whether that is realistic. If a 30% sale needs more than double the sales, it only makes sense when you have a specific reason to expect that.
What to do about it
- Pick the discount on purpose. Compare 10%, 15% and 20% for each product instead of defaulting to one store-wide number.
- Discount products with a high margin. Thin-margin products need far more extra sales, so keep them out of sitewide sales.
- Consider alternatives to a price cut. A free gift, a bundle or a small spend threshold can lift sales without cutting the price of the product itself.
- Remember existing customers. Some of the people who use a discount would have bought at full price anyway, so the real picture is a little worse than the table.
- Know your floor. The guide on discounts and losses shows how to find the price at which a sale stops making money.