Calculator

Sale Price After a Discount

A $100 item at 20% off sells for $80, a $20 markdown. If it cost $55, the new margin is 31.3% — down from 45% at full price. Discounts cut margin faster than they cut price.

Results

Visualization

Cashbizly provides illustrative business estimates only. Results depend on your inputs and assumptions and are not accounting, tax, or legal advice. Consult a CPA or financial advisor before major decisions. Tax-year figures (mileage, QBI, SEP, etc.) are labelled by year and should be verified at IRS.gov.

How It Works

Sale = Price x (1 - Discount%). Markdown $ = Price - Sale. New Margin% = (Sale - Cost) / Sale. A 20% price cut does not cost 20% of margin — on a 45%-margin item it can wipe out a third of the margin, so discount only what volume can replace.

What Should You Do?

Scenario 1: a 50% off clearance on a 40%-margin item drops margin to 0 if cost is half price. Scenario 2: a 10% promo that lifts units 25% can still grow profit if margin stays positive. Scenario 3: bundling beats discounting when margin is thin.

Frequently Asked Questions

Do discounts really grow profit?

Only if the extra volume compensates for lower margin. Use our Price Elasticity tool to test the volume you need.

What is a safe maximum discount?

Keep sale margin above your overhead rate. If overhead is 30% of revenue, never discount below 30% margin.

How does this relate to markup?

A discount erases markup from the bottom. Know your floor margin before promoting.

Authoritative References

Investopedia — Markdowns — Retail markdown definition and effect on margin.
SBA — Pricing — Promotional pricing for small business.