Promotion Break-Even Calculator

The calculator compares what your sales contribute normally with what they would contribute at the promotional price. “Contribution” here means the selling price minus the variable cost of each unit, before fixed overheads such as rent or salaries.

Your normal contribution is what these sales contribute before the promotion. It is worked out from the figures you enter. It is not a target you choose.

Sales needed for a discount

1. Normal contribution per unit = normal selling price − variable cost per unit
2. Normal contribution = normal contribution per unit × normal unit sales
3. Promotional price = normal selling price × (1 − discount)
4. Promotional contribution per unit = promotional price − variable cost per unit
5. Units needed = (normal contribution + additional promotion cost) ÷ promotional contribution per unit
6. Extra sales needed = units needed ÷ normal unit sales − 1

Units needed is often not a whole number. The calculator shows the calculated figure and, where it is a fraction, the whole units needed. That figure is always rounded up, because selling one unit fewer would fall short.

If you enter an expected uplift, the calculator also shows how that outcome compares:

1. Expected units = normal unit sales × (1 + expected uplift)
2. Contribution from the promotion = expected units × promotional contribution per unit − additional promotion cost
3. Difference from normal = contribution from the promotion − normal contribution

Biggest discount you can afford

1. Required promotional price = variable cost per unit + (normal contribution + additional promotion cost) ÷ expected units
2. Maximum discount = 1 − required promotional price ÷ normal selling price

When there is no workable answer

• If the promotional price is at or below your variable cost, each promotional sale adds nothing or loses money. No amount of extra sales can make up the difference.
• If your normal price does not cover more than your variable cost, there is no normal contribution to preserve, so the calculator does not give a break-even.
• If you expect to sell fewer units than normal, no discount can preserve your normal contribution. The calculator says so and does not show a discount figure.

A product normally sells for £50 and has a variable cost of £30, so each sale contributes £20. In a normal period it sells 100 units, which is a normal contribution of £2,000.

A 20% discount takes the price to £40, so each sale now contributes £10. The promotion also costs £200 to advertise. To contribute the same £2,000 after that cost, it needs (£2,000 + £200) ÷ £10 = 220 units. That is 120% more than normal.

If a 50% uplift is more realistic, that is 150 units. They would contribute 150 × £10 − £200 = £1,300, which is £700 less than normal.

Working the other way: if 150 units is the realistic expectation, the price would need to be £30 + (£2,000 + £200) ÷ 150 = £44.67. That is a maximum discount of about 10.7%.

• Every unit in the period is sold at the promotional price.
• Variable cost per unit stays the same however many units you sell.
• Fixed overheads are not included. The comparison is between contribution with and without the promotion.
• It does not account for sales the promotion brings forward from a later period, or for repeat business from customers the promotion wins.
• The calculator does not predict how much a promotion will lift sales. You supply that estimate.
• Use the same tax basis for every money figure, for example all excluding VAT or all including VAT.
• The currency setting changes the symbol only. It does not convert between currencies.
• Results are a planning aid based on the figures you enter. They are not financial or accounting advice.