Discount Impact
Discount Impact Calculator
ProfitAnalyze how price reductions impact your required sales volume. Avoid the discount death spiral.
Deep theory
−THE DISCOUNT DEATH SPIRAL
Discounting is the most dangerous drug in business. While it provides an immediate dopamine hit of revenue, it often destroys the underlying health of the company.
If you have a 30% margin and give a 10% discount, you don't lose 10% of profit—you lose 33.3% of your profit. To make that back, you must sell 50% more volume just to stay even.
THE PSYCHOLOGICAL ANCHOR
Once you discount, you set a new 'Mental Price' in the customer's mind. They no longer see your product as worth $100; they see it as a $90 product that you were 'overcharging' for. Reverting to the original price becomes a battle against perceived greed and creates immediate churn.
TACTICAL Q&A
TERMS: VOLUME OFFSET vs. REVENUE
VOLUME OFFSET: The extra number of units you must sell to maintain the same total Gross Profit after a discount. This is the only number that matters.
REVENUE: The vanity number that goes up while your bank account might be staying flat or shrinking due to compressed margins.
Related terms
Your diagnostic
10% off needs 43% more sales.
TACTICAL PROMO
Recommended lesson
Value Ladder Logic