Discount Impact: 10% Off a $100 Item with $60 Cost
Offering a 10% discount on a $100 product that costs $60 reduces gross margin from 40% to 33.3%.
How to use this tool
- Enter original selling price, cost per unit (cogs) and discount offered in the fields above.
- Results update instantly as you type — or click Calculate.
- Read your new gross margin after discount and the full breakdown beneath it.
A 10% price discount may seem small but can dramatically compress gross margins — this example shows the true margin impact of a common promotional discount.
Frequently asked questions
- Why does a small discount have a big impact on margin?
- Because the discount comes entirely out of your profit, not your cost. A 10% discount on a product with 40% margin reduces margin by 6.7 percentage points — a 17% reduction in profitability. The lower your margin, the more damaging each percentage of discount.
- How do I calculate the volume increase needed to offset a discount?
- Volume increase needed = (original margin / new margin) − 1. If original margin is 40% and discount reduces it to 33.33%, you need to sell 40/33.33 = 1.2× as many units — a 20% volume increase — just to maintain the same gross profit dollars.