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Discount Break-Even Calculator: Know Your Numbers Before You Discount

Find out if your discount will actually make money. Enter your margin and discount percentage to see how many extra sales you need just to break even.

Muhammed Tüfekyapan By Muhammed Tüfekyapan
5 min read
Discount Break-Even Calculator: Know Your Numbers Before You Discount - Growth Suite

Key Takeaways

  • A 20% discount on 40% margins doesn't cost 20%—it costs 50% of your profit
  • Use the break-even formula: Discount % ÷ (Margin % − Discount %) = Required sales increase
  • If your discount equals or exceeds your margin, you lose money on every sale
  • Blanket discounts waste margin on customers who would pay full price anyway
  • Target discounts only to hesitant visitors to protect your margins

Here's a question that will change how you think about discounts forever:

If you offer 20% off, how many more units do you need to sell just to make the same profit?

Most merchants guess wrong. Way wrong.

The answer depends on your profit margin. And that's exactly what this calculator shows you.

Enter your numbers below. See the truth. Then decide if that discount is really worth it.

Break-Even Calculator

Find out how many extra sales you need to justify your discount

%

Common ranges: Fashion 40-60%, Electronics 15-30%, Beauty 60-80%

%

Try different values to see how they affect your break-even

To break even, you need to sell

+100%

more units than you normally would

Profit Lost Per Sale

-50%

New Margin After Discount

20%

If You Sell 100 Units Normally...

Need 200

How The Math Works

Let's make this simple.

Say you sell a product for $100. Your cost is $60. That means you keep $40 profit. Your gross margin is 40%.

Now you offer 20% off. The customer pays $80 instead of $100.

But wait. Your cost is still $60. So now your profit is only $20.

You didn't lose 20% of your profit. You lost 50% of your profit.

That's the trap. Discounts come out of your margin, not your revenue.

The Break-Even Formula:

Required Sales Increase = Discount % ÷ (Margin % − Discount %)

Using our example:

  • Discount: 20%
  • Margin: 40%
  • Break-even: 20% ÷ (40% − 20%) = 20% ÷ 20% = 100% more sales needed

You need to double your sales just to make the same profit. Not more profit. The same profit.

What This Means For Your Store

The "Traffic Question"

Before you run any discount, ask yourself: Can I really double my traffic?

If you normally sell 50 units a week, can you sell 100? If not, you're losing money on that 20% off sale.

Most stores can't double their traffic overnight. So most "20% off" sales actually hurt profits.

The Dedicated Buyer Problem

Here's something the calculator doesn't show: not everyone who uses your discount needed it.

Some visitors were going to buy anyway. At full price. They didn't need convincing.

But you showed them a discount popup. They used it. You just gave away margin for nothing.

This is called the "Dedicated Buyer Problem." Blanket discounts subsidize people who would have paid full price.

The real question isn't "how much discount?"
It's "who should see the discount?"

Break-Even Reference Table

Here's a quick reference. Find your margin on the left. See how many more sales you need for each discount level.

Your Margin 10% Off 15% Off 20% Off 25% Off 30% Off
30% Margin +50% +100% +200% +500% Impossible
40% Margin +33% +60% +100% +167% +300%
50% Margin +25% +43% +67% +100% +150%
60% Margin +20% +33% +50% +71% +100%
70% Margin +17% +27% +40% +56% +75%

Color guide: Green = Achievable for most stores. Amber = Challenging. Red = Very difficult or impossible.

A Smarter Approach: Show Discounts Only to Those Who Need Them

The break-even math assumes every discounted sale is a new sale. A sale that wouldn't have happened otherwise.

But blanket discounts don't work that way.

When you show a popup to everyone, you're also showing it to people who were ready to buy. You're giving away margin to customers who didn't need a nudge.

The smarter approach:

  1. Watch visitor behavior. Some people are browsing. Some are buying. The difference is visible in how they act.
  2. Identify hesitant visitors. Long time on page. Mouse moving to close tab. Cart sitting idle. These are signs someone needs a push.
  3. Show offers only to them. The convinced buyer pays full price. The hesitant visitor gets the nudge they need.

This is called intent-based discounting. It protects your margins while still capturing sales you would have lost.

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Stop Giving Discounts to People Who Don't Need Them

Growth Suite watches how visitors behave in your store. It identifies who's about to leave without buying. Then it shows a personalized, time-limited offer only to those hesitant shoppers. Dedicated buyers never see a discount. Your margins stay protected.

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Key Takeaways

  • Discounts cost more than you think. A 20% discount on 40% margins cuts your profit in half.
  • Always calculate break-even first. If you can't hit those volume numbers, don't run the sale.
  • Blanket discounts waste money. Some visitors would buy at full price. Don't subsidize them.
  • Target hesitant visitors only. Show discounts to people who need them. Protect margin on everyone else.

Frequently Asked Questions

How do I calculate break-even for a discount?
Use this formula: Required Sales Increase = Discount % ÷ (Margin % − Discount %). For example, with a 40% margin and 20% discount: 20 ÷ (40 − 20) = 100%. You need to double your sales just to make the same profit.
What is a good gross margin for discounting?
Higher margins give you more room to discount. With 60%+ margins, you can offer 20% off and still have reasonable break-even targets. With 30% margins, even a 10% discount requires 50% more sales to break even. Know your numbers before you discount.
Why does a 20% discount cost 50% of my profit?
Because discounts come out of your margin, not your revenue. If you sell for $100 with $60 cost (40% margin = $40 profit), a 20% discount means selling for $80. Your cost stays $60, so profit drops to $20. That's half your original profit—a 50% loss.
When is a discount mathematically impossible to profit from?
When your discount percentage equals or exceeds your gross margin. If your margin is 30% and you offer 30% off, your profit is zero. If you offer 35% off, you lose money on every sale. No amount of volume can fix this.
How many more units do I need to sell with a 10% discount?
It depends on your margin. At 40% margin: +33% more sales. At 50% margin: +25% more sales. At 30% margin: +50% more sales. The lower your margin, the harder discounts hit.
Is it better to offer percentage or dollar discounts?
For products under $100, percentage discounts feel bigger to customers (20% off sounds better than $15 off on a $75 item). For products over $100, dollar amounts feel bigger ($50 off beats 10% off on a $500 item). The profit impact is the same—only perception changes.
What is the dedicated buyer problem with discounts?
Some visitors were going to buy at full price. They didn't need a discount to decide. When you show blanket popups to everyone, these 'dedicated buyers' use the code anyway. You just gave away margin for a sale that was already happening.
How can I discount without hurting margins?
Show discounts only to hesitant visitors—people showing exit intent, long idle time, or cart abandonment behavior. Protect full-price revenue from convinced buyers. This is called intent-based discounting. Tools like Growth Suite do this automatically.

References & Sources

  • [1] The Effect of Price Discounts on Consumer Behavior - Journal of Consumer Research (2023) View Source →
  • [2] Promotional Pricing Strategies and Break-Even Analysis - Harvard Business School (2024) View Source →

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Muhammed Tüfekyapan

Muhammed Tüfekyapan

Founder of Growth Suite

Muhammed Tüfekyapan is a growth marketing expert and the founder of Growth Suite, an AI-powered Shopify app trusted by over 300 stores across 40+ countries. With a career in data-driven e-commerce optimization that began in 2012, he has established himself as a leading authority in the field.

In 2015, Muhammed authored the influential book, "Introduction to Growth Hacking," distilling his early insights into actionable strategies for business growth. His hands-on experience includes consulting for over 100 companies across more than 10 sectors, where he consistently helped brands achieve significant improvements in conversion rates and revenue. This deep understanding of the challenges facing Shopify merchants inspired him to found Growth Suite, a solution dedicated to converting hesitant browsers into buyers through personalized, smart offers.

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