Running a sale feels good — until you see the numbers. Discounts reduce revenue immediately but leave all your costs unchanged. A 20% discount on a product with a 25% margin can eliminate profit entirely. The Discount Im…
Running a sale feels good — until you see the numbers. Discounts reduce revenue immediately but leave all your costs unchanged. A 20% discount on a product with a 25% margin can eliminate profit entirely. The Discount Impact calculator shows exactly what a promotion will cost you and how many extra sales you'd need to break even.
1
A 10% discount on a 20% margin product reduces that margin by 50% — not 10%.
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The "extra sales needed" figure shows how many more units you must sell post-discount to earn the same profit as before.
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Seasonal discounting on Etsy and Shopify can drive volume, but only if your margin can absorb the reduction.
Frequently asked questions
It depends on your margin. If your margin is 25%, a 20% discount reduces your net profit by roughly 80%. Use the Discount Impact calculator to see the exact impact based on your real costs.
The extra sales needed depends on the ratio of your pre- and post-discount profit. A steep discount on a thin margin may require 3–5× the normal sales volume just to break even — ProfitGenie calculates this precisely.
They can be, if your base margin is healthy enough to absorb the discount. Run your numbers through the Discount Impact calculator before activating a sale to see whether the promotion is financially viable.
As a general rule, your margin after discount should remain above 10% to stay financially sustainable. Below that, each sale generates very little profit and any cost increase could result in losses.
