When a discount pays for itself
A 10 percent discount at a 40 percent margin needs 33 percent more volume to break even. Most promotions never get there.
Discounting is the fastest lever in the business and the least measured. The arithmetic is not complicated, it is just rarely done before the promotion runs.
Break-even volume uplift is the discount divided by the margin that survives it. At a 40 percent gross margin, a 10 percent discount leaves 30 points, so you need a third more units simply to stand still.
Measure the month after, too
Most promotions pull demand forward rather than creating it. If the following month dips below trend by roughly what the promotion added, you bought volume you already had.
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