I built this because the question comes up before every sale and the answer is usually a guess. A discount cuts the margin on every unit, so the extra volume needed to stand still is much bigger than the discount itself. With the defaults below, 20% off needs about 81% more units just to make the same money. Change the numbers to match your product.
What you need to sell
If your expected uplift happens
Uplift needed at each discount
| Discount | Per unit | Uplift needed | Extra per 100 |
|---|
How this works
Everything is worked per unit, on the price without VAT, because VAT is not yours to keep. The measure is contribution: what each unit earns after product cost, payment fees and fulfilment. Fixed costs such as rent and salaries are left out because a promotion does not change them.
contribution per unit = price ex VAT - product cost - fees % x price paid - fulfilment
units multiplier = contribution before / contribution after
uplift needed = multiplier - 1
with marketing: units needed = (normal units x contribution before + marketing) / contribution after
The default numbers: a £100 price including 20% VAT is £83.33 without it. Fees of 2% are charged on the full £100, so £2.00. Contribution is £83.33 - £40 - £2.00 - £5 = £36.33. At 20% off the price paid is £80, which is £66.67 without VAT, fees fall to £1.60, and contribution is £66.67 - £40 - £1.60 - £5 = £20.07. That is 1.81 times as many units, an uplift of 81.1%. The page uses unrounded figures, so working it by hand with pennies rounded first can land a tenth of a point away.
Assumptions you should check:
- Payment fees are a percentage of the price the customer pays, VAT included. Real fees often add a fixed amount per transaction; if yours do, fold it into the fulfilment figure.
- Product cost and fulfilment per unit stay the same whatever you sell. There are no volume discounts from suppliers, no stock-outs and no extra shipping costs for a busier warehouse.
- If you enter gross margin instead of cost, the margin is measured on the price without VAT at full price and converted to a cost per unit. That cost then stays fixed when the discount applies.
- The figures are per unit. If shipping is charged per order and orders hold several units, use an average per unit.
- The VAT rate is editable. The UK standard rate is 20%; reduced and zero rates apply to some goods, and other countries differ. This is not tax advice.
- The table and the headline use the same marketing assumption: if you enter marketing spend and normal units, the uplift includes the cost of that spend.
Not modelled, but they matter:
- Pull-forward and subsidised regulars. Some of the people who buy on promotion would have bought at full price anyway. You give them the discount and gain no extra sale. Others buy early and then buy less later.
- Brand and reference price. Frequent discounting teaches customers what the real price is. The next sale has to be bigger, and full price gets harder to hold.
- Returns. Promotional orders often come back more than full-price ones, which reduces the contribution you are trying to match.
- Delivery charges. Shipping charged to the customer and free-delivery thresholds are not modelled. A discount can push baskets over or under a threshold, which changes what you collect and what you pay to ship.
- Halo and cannibalisation. A promotion can lift sales of other products, which helps, or pull sales away from products that are not discounted, which hurts. Neither is counted here.
Treat the required uplift as the minimum you need, not a forecast. If it looks more than you could plausibly sell, the discount is probably too deep for the margin. Nothing you type leaves your browser; the link in the address bar is the only place the numbers are kept.
