Around festivals or year-end, many shops want to run promos to pull in customers — but the painful truth is a small discount can wipe out far more profit than you’d expect, because a discount doesn’t come off “price”, it comes off “profit”, which is a much smaller slice. This post gives you the math on how big a discount means how many more units you must sell, and which promo types hurt less.
Why a 10% discount cuts a third of your profit
Take an item that costs ฿70 and sells for ฿100 (฿30 profit per unit):
- Normal: ฿100 − ฿70 cost = ฿30 profit
- 10% off (sell at ฿90): ฿90 − ฿70 cost = ฿20 profit left
A 10% price cut but ฿10 of ฿30 profit gone = a third wiped out! Because cost doesn’t drop with the discount, the whole discount comes straight out of profit. (If you’re unsure about per-unit profit, read: How to calculate shop profit)
Formula: discount x%, how many more units to break even
Before running a promo, ask “how many more units must I sell to earn the same total profit.” Simply:
New sales target = profit you want ÷ profit per unit after discount
From the example above, if you normally sell 100 units for ฿3,000 total profit, then after a 10% discount profit per unit drops to ฿20, so you need 3,000 ÷ 20 = 150 units to match the same profit. That’s selling 50% more just to offset a 10% discount — if the promo doesn’t lift volume that much, you’re busier but earning less overall.
Which promo types hurt less
- Add value instead of cutting price — throw in a small low-cost item that feels worth it, better than slashing the price.
- Spend-more conditions — “spend ฿200, get ฿20 off” lifts basket size, better than discounting every unit.
- Promo only on high-margin items — items with fat margins still leave profit after a cut; don’t discount thin-margin goods.
- Bundles — pair a best-seller with slow-moving stock to clear inventory and raise basket size.
Year-end promo traps to watch
- Racing to undercut the shop next door until you forget how much profit you have left.
- High-cost giveaways that eat more than the discount itself.
- Discounting already-thin-margin items that flip to a loss with one more cut. (See: Hidden costs that shrink your profit)
Always set a goal before running a promo
Be clear what the promo is for: more sales / clearing stock / new customers. Different goals call for different promo types and budgets. A promo “run because everyone else is” with no goal is the one that usually loses money.
A tool like Posless stores each item’s cost and per-unit profit, so before a promo you instantly know how deep you can discount and still earn, and afterward you can see whether total profit actually rose — not just sales. (More on gross vs net: Gross profit vs net profit)
Frequently asked questions
Q: What discount percentage is about right? A: There’s no fixed number — it depends on your per-unit profit. Work backward from the profit you can afford to give up, then check the promo can lift volume enough to offset it.
Q: Whole-shop sale or just some items — which is better? A: Selected items (high-margin or stock to clear) usually control profit better than a store-wide sale, which risks eating into your already-strong sellers.
Q: Customers get hooked on promo prices and sales drop afterward — what do I do? A: Keep promos short with a clear end date, and rotate formats (freebies/points) instead of permanent price cuts, so customers don’t get used to low prices.
Summary: Discounts come out of profit, not price — a 10% cut can erase a third of per-unit profit. Before a promo, calculate how many more units you must sell to break even, choose promos that add value or raise basket size instead of slashing price, and always set a goal, so a promo lifts real profit, not just nice-looking year-end sales.