Discount Breakeven Calculator

Why discounts cost more than they look

A discount comes straight off your margin, not off your price in some painless way. If you sell at a 50% margin and cut the price 20%, that 20 points has to come out of the 50 you were keeping, so you are left with 30 points to work with. The thinner your margin to begin with, the more extra unit sales you need just to stand still. Plenty of promos quietly lose money because the volume lift, however good it looks in the dashboard, never covers the margin you gave away on every single order, including all the customers who would have paid full price anyway.

The fix is to treat discounts as something you test deliberately and then watch downstream, not a reflex you reach for when a number looks soft. Run the promo as an experiment, hold back a control, and follow what happens to retention and repeat revenue rather than the day-one spike. That is the same discipline behind running pricing experiments, choosing the right monetization models, and doing careful paywall optimization. Price is a lever you turn with evidence, and the break-even math above is the floor you have to clear before any of it is worth doing.