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 marginPrice cutSales increase needed for the same total contributionPrice increaseMaximum 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.

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