Start with contribution per sale
For this simplified fictional example, a service sells for USD 100 and costs USD 60 to deliver. The difference is USD 40 before fixed overheads and tax. A USD 20 discount reduces the selling price to USD 80 while the USD 60 delivery cost stays the same. The difference falls to USD 20: half the original amount.
This is a scenario calculation, not a prediction of demand. Your costs may change with order volume, overtime, advertising, payment fees or additional revisions. Include those effects before deciding that a promotion is affordable.
Compare the options side by side
| Discount | Price | Delivery cost | Difference before overheads | Margin on price |
|---|---|---|---|---|
| 0% | 100 | 60 | 40 | 40% |
| 10% | 90 | 60 | 30 | 33.3% |
| 20% | 80 | 60 | 20 | 25% |
| 30% | 70 | 60 | 10 | 14.3% |
Margin is the difference divided by selling price. It is different from markup, which uses cost as its denominator. The example’s contribution reaches zero at a 40% discount, before any additional promotion costs.
Calculate the volume needed to stand still
At full price, ten sales provide USD 400 before overheads. At the 20% discount, each sale provides USD 20, so you need twenty sales to reach the same USD 400. That means twice the delivery workload if each sale takes the same time.
The comparison assumes the same cost per sale and enough capacity to fulfil every order. If you need overtime or extra support, calculate the new cost rather than keeping USD 60 in the model. If some buyers would have paid full price anyway, extra order volume is not all incremental demand.
Check the whole offer before it goes live
Google’s October 2026 holiday shopping guide discusses seasonal discount timing using U.S. shopping data. That makes this a useful review period; it does not tell you which discount your customers need.
- Define the eligible service, order dates and exclusions clearly.
- Include delivery, support and promotion costs in the calculation.
- Check capacity at the sales volume needed to preserve contribution.
- Compare a smaller discount or a genuinely lower-cost bundle.
- Set a review date and record actual contribution after cancellations or refunds.
Use the calculator to choose a boundary
Enter your own cost base and target margin in the service pricing tool, then compare several discounts. Write down the lowest acceptable contribution and the capacity limit before launching. The output helps explain the trade-off; it cannot establish whether a promotion will generate demand.
Use a campaign results report afterwards to compare spend and outcomes. If you need the underlying definitions, read margin versus markup.
Test your discount and margin using your own information. Review the result before exporting or sharing.
Test your discount and margin →