How this calculator works
First reconstruct the regular selling price from a known pair of pricing measures. Apply a percentage reduction or select a target final price, margin or markup to infer the discount. Cost stays fixed. A full discount leaves a zero price and a loss equal to cost; margin on zero revenue is undefined and is omitted. All figures exclude sales tax, overhead and any supplier rebate.
Formula
Sale price = regular price x (1 - discount). Final profit = sale price - cost. Final margin = final profit / sale price. Final markup = final profit / cost. Discount for a target margin = 1 - cost / ((1 - target margin) x regular price).
Worked example
A $100 cost with 20% initial margin gives a $125 regular price. A 10% discount leaves $112.50, $12.50 profit, 11.111111% margin and 12.5% markup. A 20% discount reaches the $100 break-even price.
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Frequently asked questions
Can a small discount remove most of the profit?
Yes. A discount is a share of selling price, while profit may be a much smaller part of that price. Track the remaining dollar profit as well as the new margin.
What is the largest discount before a loss?
With fixed cost, break-even occurs when sale price equals cost. The maximum discount fraction equals the original margin fraction.
Can I target a higher margin?
Only a target attainable through a price reduction is accepted. A higher price belongs in the margin and markup tool.