The Hidden Cost of "10% Off"
Discounts are the drug of the marketing world. They give you a quick hit of revenue volume, but they can silently kill your business if you don't understand the math behind them.
The mistake most founders make is thinking linear: "If I give a 20% discount, I just need to sell 20% more to break even." This is false. Because discounts come directly out of your profit margin (not your costs), the required volume increase is exponential.
Margin Erosion
A 10% discount on a product with 30% margins isn't a small hit—it wipes out 33% of your profit instantly.
Volume Trap
To make up for that same 10% discount, you don't need 10% more sales—you actually need 50% more sales volume just to make the same dollar amount.
Brand Perception
Chronic discounting trains customers to wait for a sale, permanently lowering your brand's perceived value and your Average Order Value (AOV).
How to Use This Discount Calculator
Use this tool before you launch your next Black Friday sale or affiliate campaign.
- Selling Price: The retail price your customer usually pays.
- Cost of Goods (COGS): How much it costs you to make or deliver one unit. For SaaS, this might be low (server costs). For e-commerce, it includes manufacturing and shipping.
- Discount: The percentage or dollar amount you plan to take off.
- Commission (Optional): If you are using affiliates, add their commission rate here. This stacks on top of the customer discount to show the total margin impact.