Rex says
Money math without the spreadsheet headache. Plug in your numbers and I'll show you exactly where the dollars land.
Try a scenario
Click to load — tweak from there.Inputs
Result
Volume increase needed to break even
55.6%
Margin $ per unit after discount
$18.00
Margin $ per unit before discount
$28.00
Units needed at discounted price
311
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How to use this
- 1Enter regular price ($).
- 2Enter cost of goods ($).
- 3Enter units currently sold (full price).
- 4Enter proposed discount (%).
- 5Read your volume increase needed to break even on the right — it updates as you type.
- 6Hit Share to keep the scenario or send it to someone.
About this calculator
A 20% discount doesn't just cut your margin by 20 percentage points — the volume needed to make up for the lost margin dollars per unit is often larger than sellers expect, especially at lower starting margins. This calculator shows exactly how much unit volume increase is required to keep total gross margin dollars flat after a markdown, given your current price, cost, and the proposed discount percentage. Enter your regular price, cost of goods, current units sold at full price, and proposed discount percentage. The output shows margin dollars per unit before and after the markdown and the exact percentage volume increase needed to break even on total margin dollars, which routinely surprises sellers running clearance or promotional discounts without checking the math first, since at a 50% starting margin, a 20% discount requires roughly 67% more units sold just to match prior total margin dollars.
Worked example
Using the values the calculator loads with:
Inputs
- Regular price: 50 $
- Cost of goods: 22 $
- Units currently sold (full price): 200
- Proposed discount: 20 %
Results
- Volume increase needed to break even: 55.6%
- Margin $ per unit after discount: $18.00
- Margin $ per unit before discount: $28.00
- Units needed at discounted price: 311
What each field means
Inputs
- Regular price ($)
- The regular price used in the calculation, measured in $. Starts at 50 $ so you have a working example on load.
- Cost of goods ($)
- The cost of goods used in the calculation, measured in $. Starts at 22 $ so you have a working example on load.
- Units currently sold (full price)
- The units currently sold (full price) used in the calculation. Starts at 200 so you have a working example on load.
- Proposed discount (%)
- The proposed discount used in the calculation, measured in %. Starts at 20 % so you have a working example on load. Accepted range: 0–90 %.
Results
- Volume increase needed to break even
- Returned as a percentage and shown as the headline result. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Margin $ per unit after discount
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Margin $ per unit before discount
- Returned as a money amount in US dollars. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
- Units needed at discounted price
- Returned as a whole number. It recalculates instantly whenever you change an input, so you can compare scenarios without reloading.
FAQ
Why does a small discount require such a large volume increase?
Because the discount hits margin dollars, not revenue, and margin is usually a much smaller number than price. At a 40% margin, a 20% price cut removes half your margin dollars per unit, so you'd need double the volume just to stand still on total margin dollars, not just 20% more.
Does this account for the discount driving new customer traffic?
No, this is a pure like-for-like volume breakeven on existing demand. If a discount also pulls in shoppers who wouldn't have bought otherwise, or clears aged inventory that would otherwise become a total write-off, the discount can still be worth it even below this breakeven line.
When does a markdown make sense even without hitting breakeven volume?
When the alternative is unsold inventory becoming a total loss (obsolete, out of season, or taking up warehouse space you need for new stock), recovering even partial margin below the breakeven threshold is better than a 100% write-off.
How should I set discount depth for clearance versus promotion?
Promotional discounts on healthy-margin, in-demand products should stay shallow enough to hit near breakeven volume increases (10-20% off at 40%+ margin). Clearance discounts on aging or discontinued stock can go much deeper since the real alternative is often zero recovery.
Accuracy and limitations
- Results are estimates before tax, fees, and inflation unless an input explicitly covers them.
- Rates are treated as fixed for the whole period — variable-rate products will drift from this projection.
- This is educational maths, not financial advice. Check anything contractual with the lender or your accountant.
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Cite this calculator
Writing about this topic? Grab a citation — every link helps keep these tools free.
RevenueLab. (2026). Markdown & Discount Margin Impact Calculator. Retrieved from https://www.revenuelab.fyi/toolbox/markdown-margin-impact
<p>Source: <a href="https://www.revenuelab.fyi/toolbox/markdown-margin-impact" target="_blank" rel="noopener">Markdown & Discount Margin Impact Calculator — RevenueLab</a> (2026).</p>
Source: [Markdown & Discount Margin Impact Calculator — RevenueLab](https://www.revenuelab.fyi/toolbox/markdown-margin-impact) (2026).