What is the biggest discount I can give before I start losing money?
The largest discount you can take off the selling price equals your margin. If your margin is 35%, a 35% discount brings profit to zero and anything deeper is a loss. Enter the cost and your normal price in the calculator and read the margin line, not the markup line.
Why the margin is the limit
A discount comes off the selling price, and margin is also measured against the selling price. So when the margin says 35% of the price is profit, you can give away that whole 35% before you touch the cost. Markup is measured against the cost, so it is always the larger figure, and using it as your discount ceiling pushes you into a loss.
Example: a perfume costing 65 and selling for 100
Cost 65 and price 100: profit 35, margin 35%, markup 53.85%.
A 35% discount makes the price 65. Enter it and you get zero profit, with the note that price equals cost.
A 53.85% discount (the markup) makes the price 46.15. The result: a loss of 18.85 and a margin of -40.85%.
The seller who reasons 'I mark up 53% on cost, so I can survive 50% off' is actually selling at a loss on every order during the promotion.
A safe discount sits below the theoretical limit
A discount that lands on zero is not a target; it is the ceiling you never go through. In practice there are costs this calculator does not see: shipping you absorb, payment fees, the ad that brought the customer in. So first decide the smallest margin you will accept during the sale, then work out the discount that keeps it.
To keep at least a 15% margin, the price must not fall below 65 ÷ 0.85 = 76.47.
Check it in the Profit margin calculator: cost 65 and price 76.47 give a profit of 11.47 and a margin of 15.00%.
Going from 100 to 76.47 is a discount of about 23.5%, the deepest cut that still leaves that margin.
Practical steps before you announce a sale
- Enter the product's cost and normal price and read the margin: that is your discount ceiling.
- Work out the proposed sale price with the Discount calculator, especially if you are stacking a seasonal discount with a promo code.
- Enter the sale price with the same cost back into the margin calculator and make sure the remaining profit covers shipping and fees.
- Do this per product, because low-margin items may not survive a store-wide discount.
That last step matters: 20% off everything is comfortable for a product with a 50% margin and ruinous for one with 18%.
Common questions
Is a fixed-amount discount any different?
Same idea: the largest discount in money equals the profit the calculator shows. A profit of 35 means taking 35 off brings you to zero.
What if the customer also applies a promo code on top of the sale?
Two discounts in a row do not simply add up. Work out the final price with the discount calculator first, then enter it here.