Break-Even After Discount

The Break-Even Trap: Why 10% Off Costs More Than You Think

Most business owners dramatically underestimate how many extra sales a discount requires. A 10% discount does NOT require 10% more sales — the actual number depends on your profit margin.

If your margin is 30% and you offer 10% off, you need 50% more sales to break even — not 10%, not even 30%.

The Discount–Volume Matrix

Notice the 20% margin row: a 20% discount makes break-even mathematically impossible — you'd be selling at cost. Any discount above your margin guarantees a loss, no matter how much volume you push.

When Discounting Makes Sense

High margin, elastic demand: If your margin is 60%+ and a 10% discount genuinely drives 25%+ more volume, it's profitable.

Customer acquisition: If the discounted sale leads to full-price repeat purchases, the break-even math shifts in your favor over the customer lifetime.

Inventory clearance: Unsold inventory has carrying costs. A discount that moves product before it becomes obsolete can be the right call even at lower margins.