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What that discount actually costs you.
What a discount costs you, and what margin survives it.
After discount
- Discount given
- €200.00
- Effective discount
- 20.0%
- Final price
- €800.00
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Two discounts do not add up
20% and then another 10% is 28% off, not 30%. The second comes off an already-reduced price, so it is worth less than it sounds — which cuts both ways. It is a smaller giveaway than you feared, and a smaller sweetener than the client thinks they got.
What it does to the margin
A discount comes entirely out of profit, and profit is the smallest number in the sum. On a 30% margin, a 10% discount does not cost you a tenth — it costs you a third of the profit. Put your cost in and the tool shows what is left rather than what was given away.
Discounting well
A discount that buys something — a longer commitment, faster payment, a case study, a bigger order — is a trade. One given because the client paused is a price cut you have just taught them to ask for again. If you cannot name what you got, reconsider.
Questions, answered
Is it free?
Yes, and nothing is stored.
Can I stack more than two?
Two here. Chain them by putting the result back into the list price if you need a third.
Net or gross figures?
Net. Discount before VAT, then apply VAT to the discounted price.
Do I need to enter a cost?
No, but without one the tool cannot tell you what margin is left — which is usually the number that matters.
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