Pricing
Observation 006
· 2 min read
The discount that needs 75% more units.
Break-even volume on a promotion is almost always higher than the discount itself. At 30% off and a 70% margin, it is 75%.
One number
+75%
extra units needed to break even on 30% off at a 70% gross margin
One mechanism
Break-even volume = discount ÷ (gross margin − discount).
One decision
Decide what the promotion has to prove before it runs again, not how big it should be.
Hypothetical, so the arithmetic stays clean. A product with a 70% gross margin. A promotion at 30% off. To break even, the business needs 75% more units. Not 30%. Seventy-five.
Break-even is only the floor. It ignores what a discount can teach: buyers who wait for the next one, smaller baskets, full-price customers who trade down to the offer.
So the question for the promotion calendar is not how big the offer should be. It is what the promotion has to prove before it runs again.
Evidence · Modeled · Hypothetical; unit cost held constant