Insights · Pricing
A discount can grow revenue and reduce contribution.
A product sells for $25, with $13 in variable cost per sale. At 150 units, revenue is $3,750 and contribution is $1,800. A 10% discount lowers the price to $22.50 and contribution per unit to $9.50. If unit sales rise 20% to 180, revenue grows to $4,050, but contribution falls to $1,710.
| Today | 10% off, +20% units | |
|---|---|---|
| Price | $25.00 | $22.50 |
| Units | 150 | 180 |
| Revenue | $3,750 | $4,050 |
| Contribution per unit | $12.00 | $9.50 |
| Contribution | $1,800 | $1,710 |
The hurdle comes first
To preserve $1,800 in contribution, the offer needs approximately 189.47 units: 26.3% above the baseline on a continuous basis, or at least 190 whole units, a 26.7% increase. That is a hurdle, not a forecast. The next question is whether credible evidence supports that sales response.
Then look for evidence
Check comparable in-stock periods, competing offers and other promotions before choosing a bounded test. If the purpose is clearance or customer acquisition, evaluate that objective explicitly.
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