Profit absorbs the discount.
An $80 item selling for $125 earns $45 gross profit. A 20% discount cuts the price to $100 and profit to $20.
New price − Cost = New profitDiscount impact
See what a lower price really costs.
What you know
in US dollars
What the item costs you, ready to sell.
in US dollars
Your original price before sales tax.
as a percentage
The reduction from your original price.
in units
Units sold at your original price.
What you get
$20.00
$25.00 less gross profit per item.
$100.00
per item
20%
of discounted price
Original profit
$45.00
per item
Profit given up
$25.00
per item
- Sales needed to keep original gross profit
- 20→45units
You need 125% more unit sales to maintain gross profit. The count rounds up to whole sales.
20% margin25% markup
Understand the numbers
Volume must make up the gap.
At those prices, 20 original sales earn $900 gross profit. It takes 45 discounted sales to earn the same amount. This is the volume required, not a prediction that the discount will bring those sales.
Original total profit ÷ New unit profitFind the zero-profit point.
With an $80 cost and $125 original price, a 36% discount reduces the selling price to $80. That leaves no gross profit to cover other expenses. A larger discount sells below cost.
(1 − Cost ÷ Original price) × 100More sales also mean more work.
The comparison assumes your entered cost stays the same for each unit. If the promotion changes labor, packaging, or supplier costs, update cost before comparing. Extra volume does not necessarily mean extra earnings.
New unit profit × Units sold