What’s the impact when we offer a 10% discount?

Let’s assume our product sells for $100, but we decide to offer it 10% off.

We make $10 less than usual, so we “lose” 10%. Right?

Well, not so fast.

We don’t usually profit $100 by making a $100 sale. We have internal costs to incur.

So let’s assume that our standard profit margin is 20%, or $20 on this product. If we offer a $10 discount, we actually lose 50% of our profits.

The math is simple, but it’s a nuance that’s often missed. A discount goes straight to the bottom line.

-Brandon