Price Cut vs. Sales Volume: How Many Extra Units Do You Need After a 5% Discount?
See the formula and a break-even table that show why a 5% discount on a 10% margin product can mean doubling your sales.
October 20, 2026 (updated) · 4 min
How much must sales grow after a 5% price cut?
Say you sell a product at $100 and $10 of contribution profit remains after all unit deductions and fixed costs. Drop the price to $95 and contribution falls to $5. Ten sales used to earn $100 in total profit. At the new price you need 20 sales. In this example unit sales must grow by 100%.
The break-even sales volume formula
Required new unit sales = old unit sales × old unit contribution / new unit contribution. With costs that do not change with price, a starting contribution margin m and a discount rate d, the required sales increase is d / (m − d) × 100. This only holds when d < m. Otherwise unit contribution is zero or negative.
Price cut vs. price increase by margin
| Starting contribution margin | Price cut | Sales increase needed for the same total contribution | Price increase | Maximum sales drop that keeps the same contribution |
|---|---|---|---|---|
| 8% | 4% | 100% (2x) | 4% | 33.3% |
| 10% | 5% | 100% (2x) | 5% | 33.3% |
| 12% | 4% | 50% (1.5x) | 4% | 25% |
| 15% | 5% | 50% (1.5x) | 5% | 25% |
| 20% | 5% | 33.3% | 5% | 20% |
Assumption: the discount comes straight out of unit contribution, fixed unit deductions stay the same and demand is not yet modeled. In real orders, percentage-based commissions and different shipping thresholds can change the result.
What does a 5% price increase look like?
Move a product with $10 contribution at $100 up to $105 and unit contribution becomes $15. To hold the old total contribution you only need about 6.67 sales instead of 10. Sales can fall 33.3% and total contribution stays level. Still, until you measure how your customers actually react to the higher price, you cannot say it is the better price.
Why Trendyol commissions need a separate check
When commission is a percentage of the selling price, the commission amount shifts after a discount. If a shipping or campaign threshold moves too, contribution profit becomes piecewise. Treat the table as a starting point, not a final accounting calculation.
Compare shipping thresholds and threshold crossings with price simulations that use price elasticity.
FAQ: With a 5% margin, can I offer a 5% discount?
In this simplified model, unit contribution drops to zero and extra volume cannot rescue total contribution. In practice, costs that move with price need their own calculation.