Discount and margin: how much more you must sell to make the same profit
A product with a 30 percent margin and 20 percent off has to sell three times as often to earn what it earned at full price. You set a discount as a share of the price, but you pay all of it out of your profit — and the profit is much smaller than the price.
Updated 2026-10-16
How much more you need to sell after a discount — the formula
Compare the profit on one item before and after the discount:
profit before = price - cost
profit after = price × (1 - discount) - cost
times as many units = profit before / profit afterPrice 100, cost 70, 20% off. Before the discount 30 stays with you per item. After it the price drops to 80 and 10 stays. To make the same 30 you have to sell three items instead of one — 200% more. A 20% discount took two thirds of the profit.
If you know the margin rather than the cost, there is a shorter version (both numbers as a share of the price):
how much more to sell = discount / (margin - discount)Margin 30%, discount 20%: 20 / (30 - 20) = 2, so +200%. Margin 40%, discount 10%: 10 / 30 = +33%. Use net price and net cost — a percentage discount is the same off the net and the gross price.
Table: margin, discount and the sales increase you need
How many more units you must sell for the sale to earn the same profit as no sale:
| Margin \ discount | 5% | 10% | 15% | 20% | 25% | 30% |
|---|---|---|---|---|---|---|
| 20% | +33% | +100% | +300% | zero profit | loss | loss |
| 25% | +25% | +67% | +150% | +400% | zero profit | loss |
| 30% | +20% | +50% | +100% | +200% | +500% | zero profit |
| 40% | +14% | +33% | +60% | +100% | +167% | +300% |
| 50% | +11% | +25% | +43% | +67% | +100% | +150% |
| 60% | +9% | +20% | +33% | +50% | +71% | +100% |
Two things stand out. As the discount gets close to the margin, the increase you need explodes: with a 30% margin, 15% off needs twice the sales and 25% off needs six times as many. And once the discount equals the margin or exceeds it, every item sells at zero profit or at a loss, and no number of orders wins that back.
Which discount pays off — the sum the other way round
More often the question is the reverse: I expect the sale to lift volume by this much — how big a discount can I give without losing money? The lower half of the calculator uses:
largest discount = margin × increase / (100% + increase)A 30% margin and an expected increase of one half: 30 × 50 / 150 = 10%. A bigger discount with that increase earns less than an ordinary week. Even doubling your sales (a 100% increase) lets you give away only half the margin — 15% off at a 30% margin.
Before Black Friday: what to check before you set a discount
Black Friday falls on 27 November in 2026. Before you set your discounts, check the places where the calculator and your store part ways:
- The product’s margin, not the store average. “20% off the whole category” looks safe with an average margin of 35%, but the products with a 15–20% margin then sell at zero profit or at a loss. Work the discount out for the lowest-margin products, not for the average.
- The whole discount the customer gets. A sale price and a percentage coupon on the same product stack: 20% off plus a 10% coupon is 28% off the regular price. Put that combined discount into the calculator.
- Free shipping during the sale is an extra cost on every order that this sum does not see.
You can also stop sales below cost in the store itself. Since October 2026 the WordPress.org directory has a free plugin, JeyTech Below Cost Guard: it reads the same WooCommerce cost field and, after coupons are applied, can stop an order in which a product ends up below its cost (by default it only records such cases in the log). We have not tested it.
What this sum leaves out
The calculator compares the profit on the goods alone. It leaves out fixed costs, returns, payment fees and the customers who would have bought anyway, just without the discount — or who order now instead of in December. That makes it a lower bound: in practice you need to sell more, not less.
What Merchgain shows after the sale
Merchgain is a free profit report for WooCommerce. Set it to the dates of your sale and you see the profit and margin of every product, worked out from revenue after discounts and coupons and from the cost recorded on the order. Sort by profit, lowest first — the products sold below cost come first, with a minus. The same report for an equally long period before the sale shows whether the extra volume paid for the discount. Products without a cost are shown separately, so they do not pass for profit. The margin and markup formulas are in the margin vs markup calculator, and what exactly counts as revenue is in how profit and margin are calculated.
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