Seller ProfitWhat a discount really costs
A price cut shaves your margin on every unit. The extra sales needed to cover it are bigger than most sellers think.
The formula
If your margin per unit is m percent of the old price and you cut the price by d percent, the margin per unit falls to (m - d). To earn the same total profit you must sell m / (m - d) times as many units, which is d / (m - d) more. A 10 percent discount on a 30 percent margin needs 50 percent more sales.
Extra sales needed (percent more units)
| Margin before | 5% off | 10% off | 15% off | 20% off |
|---|---|---|---|---|
| 15% | +50% | +200% | never | never |
| 20% | +33% | +100% | +300% | never |
| 25% | +25% | +67% | +150% | +400% |
| 30% | +20% | +50% | +100% | +200% |
| 40% | +14% | +33% | +60% | +100% |
| 50% | +11% | +25% | +43% | +67% |
"Never" means the discount is as large as the margin: every unit earns nothing, so no volume helps. Use the margin from the profit calculator (profit divided by the sale value without GST) for this sum.
Better ways to attract buyers
- Offer a gift or free shipping above a basket value instead of a cut.
- Sell a bundle with a small saving.
- Give a code only to repeat customers.
- Cut a cost you can control, then pass part of the saving on.
Common questions
Does a discount always bring enough extra sales?
No. At a 20 percent margin, a 10 percent discount needs sales to double just to earn the same profit. Most sellers never get that lift from a small price cut.
When is a discount worth giving?
When you can lower a cost at the same time, clear stock that would otherwise be thrown away, or win customers who return, or when a big event will bring volume you could not get otherwise.
Keep going
Fee percentages, GST rates and other figures in the examples on this site are made up to show the working. They are not the fees or rates of any marketplace or country: type the numbers from your own seller account and from the tax authority. Checked 14 November 2026.