Pricing – Discount Impact Calculator
PRICING DISCOUNT IMPACT CALCULATOR
When giving out discounts, many entrepreneurs underestimate the impact on their financials. They don’t realise that a 10% discount on price , easily results in a 50% loss in profit . Meaning you will have to sell twice as much to continue to make the same profit.
With this Pricing Discount Impact Calculator we hope you will get a better insight in how providing discounts to your customers will affect the bottom line for your your company (and what you need to do to compensate).
EXAMPLE
REGULAR PRICE
You sell 100 units at $100; with a cost per unit of $80.
Your revenue = $10,000
Your profit = $10,000 – $8,000 = $2,000
DISCOUNTED PRICE
What if you give away a 10% discount? Then you sell 100 units at $90; with a cost per unit of $80.
Your revenue = $9,000
Your profit = $9,000 – $8,000 = $1,000
PROFIT RECUPERATION
You have to sell 200 units at the discounted price of $90 to continue to make the same profit of $2,000.
Your revenue = $18,000
Your profit = $18,000 – $16,000 = $2,000
