Worked example
Worked example: why a 10% discount can need 34% more unit sales
A deterministic discount example showing how a 10% price reduction changes per-unit contribution and the whole-unit sales volume required to preserve current total contribution.
- retail
- online store
- product
Short answer
Short answer
At an A$100 selling price, A$60 direct unit cost and 100 current units, a 10% discount reduces contribution per unit from A$40 to A$30. Preserving the current A$4,000 total contribution requires 134 whole units — 34 more than today.
AUD illustrative inputs
Entered scenario
- Current selling price
- $100.00
- Direct unit cost
- $60.00
- Current unit sales
- 100
- Discount
- 10%
- Current contribution per unit
- $40.00
- Discounted contribution per unit
- $30.00
- Current total contribution
- $4,000.00
- Whole units required
- 134
- Additional whole units required
- 34
Deterministic result for the entered values. It does not predict demand or redemption.
The working
Before the discount, each unit leaves the selling price less the entered direct unit cost. At the current unit volume, that per-unit contribution creates the total contribution the promotion is being asked to preserve.
The discount reduces price but does not reduce the entered unit cost. That means the percentage reduction in contribution is larger than the percentage reduction in price. The required volume is therefore found by dividing today’s total contribution by the lower discounted contribution per unit.
Why the operational answer rounds up
The exact break-even volume is 133.33 units. A business cannot normally sell a fraction of the item, so the decision boundary is 134 whole units. Selling one fewer would leave total contribution below the current A$4,000 in this scenario.
The result is not a demand forecast. It tells the owner how much extra volume would be required if unit cost stays fixed and every discounted sale has the same economics. Whether customers actually buy that volume is a separate observed or explicitly modelled assumption.
When there is no finite extra-sales target
If the discounted price is equal to the direct cost, every additional discounted unit contributes zero. If it falls below direct cost, every additional unit deepens the loss. In either case, increasing volume cannot reproduce a positive current contribution, so MarginKoala reports the signed economics rather than inventing a normal sales target.
Fees, fulfilment, returns and channel commissions should be included when they vary with each sale. Leaving them out can make the promotion appear safer than the actual order economics.
Product-derived definitions
Formula sources used on this page
Should I run this sale?
Discount Profit
Contribution before and after the discount
For each unit, subtract the direct per-unit cost entered from the current price and from the discounted price. Multiply each per-unit contribution by the same sales volume to isolate the effect of the discount before fixed costs.
Catch-up volume
When the discounted sale still has positive contribution, reverse-solve the unit volume needed at the discounted price to reproduce today’s total contribution. If contribution per discounted unit is zero or negative, no higher volume can reproduce a positive current contribution.
How many extra sales does this discount need?
Sales to Cover a Discount
Same-contribution sales target
First calculate current total contribution from current price, direct per-unit cost and normal volume. Then divide that current contribution by contribution per unit at the discounted price to find the sales volume required to leave the same total amount.
When more sales cannot fix it
If the discounted price is at or below the direct per-unit cost entered, each additional discounted unit contributes zero or less. In that case there is no finite extra-sales target that restores a positive current contribution.
Related guidance
Linked only where a formula, decision problem, source or business context is shared.
