Discounts are usually judged on how many extra sales they produced. The right question is how many they needed to produce — a hurdle that rises much faster than the discount itself.
Discount Break-Even Calculator
How much more do you have to sell for a discount to be worth running?
$
Over the promotion period
%
Typical SaaS sits at 75–85%
Ignores customers who would have paid full price and used the discount anyway — in practice that makes the real hurdle higher still.
Sales uplift needed+33.3%to match today's revenue at 25% off
- Discounted price
- $36.75
- Sales needed
- 267up from 200
- To match profit
- +45.5%291 sales
A 25% discount needs 33.3% more sales just to stand still on revenue — and 45.5% more to stand still on profit.
Revenue uplift needed at each discount
10% off+11% sales
15% off+18% sales
20% off+25% sales
25% off+33% sales
30% off+43% sales
40% off+67% sales
50% off+100% sales
Why the hurdle exceeds the discount
Cut the price 25% and you keep 75% of the revenue per sale. To get back to where you were, you need 1 ÷ 0.75 = 1.333 times the sales — a 33% increase, not 25%.
| Discount | You keep | Sales uplift needed |
|---|---|---|
| 10% | 90% | +11% |
| 20% | 80% | +25% |
| 25% | 75% | +33% |
| 33% | 67% | +50% |
| 50% | 50% | +100% |
Profit is the harder test
Revenue break-even understates the problem, because a discount comes entirely out of gross profit. Your costs to serve each customer do not fall just because the price did.
At an 80% gross margin, a $49 product contributes $39.20. Discount it 25% to $36.75 and the contribution drops to $26.95 — a 31% fall in profit per sale from a 25% cut in price. Matching profit needs 45% more sales, not 33%.
When a discount is still the right call
- Clearing a specific barrier, such as a launch with no reviews or social proof yet
- Annual prepayment, where you are buying cash and retention rather than volume
- A genuinely time-boxed window, which creates urgency instead of resetting expectations
- Reaching a segment that truly cannot pay full price, ideally gated so your main market cannot use it
What rarely works is a recurring sitewide discount. It trains customers to wait, and the hurdle has to be cleared every single time.
GOOD QUESTIONS
Frequently asked
Why does a 25% discount need 33% more sales?+
Because the two percentages are measured against different bases. Cutting 25% leaves you 75% of the revenue per sale, and getting back to 100% requires 1 ÷ 0.75 = 1.333 times the volume. The deeper the discount, the wider the gap: 50% off needs double the sales.
Should I use revenue or profit break-even?+
Profit. A discount comes out of gross margin, so profit per sale falls faster than price does. Revenue break-even is the friendlier number and the one most promotions are wrongly judged against.
Do discounts hurt beyond the promotion period?+
Frequently. Regular discounting teaches customers to wait for the next one, which depresses full-price sales between promotions. Time-boxed, infrequent, or segment-gated offers avoid most of that.
Is a free trial better than a discount?+
Usually, for SaaS. A trial removes risk without touching the price you eventually charge, so it does not reset the customer's reference point. A discount lowers what they believe the product is worth.