# 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.

## Short answer

If a product earns a unit contribution of 10% of its price and you discount it 5%, unit profit drops to 5% (assuming costs do not change with price). Unit sales must double to keep the same total profit. This is not universal for every marketplace: if percentage-based commission, coupons or shipping change, the equation has to be rebuilt.

- Category: Margin Management
- Published: 2026-01-22
- Last updated: 2026-10-20
- Canonical: https://xprice.ai/en/resources/price-cut-vs-sales-volume

## 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](https://xprice.ai/en/resources/shipping-threshold-pricing) with [price simulations that use price elasticity](https://xprice.ai/en/resources/rule-based-repricer-vs-simulation-engine).

## 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.