Break Even and What a Discount Really Costs

A 10% discount needs 33% more volume to stand still. A 20% discount needs 100% more, and a 30% discount needs 300%. The discount attacks contribution margin, not revenue, which is why it costs so much more than it looks.

WHAT THE YEAR HAS TO BRING IN

The first worksheet page starts from $56,000 of take-home income, $13,700 of overhead across the items listed and tax on profit, and works out the revenue the business needs: $88,366.67 a year. This business does not sell hours, so the kit does not turn that into an hourly rate. Every step is printed, with a blank worksheet for your own numbers.

A 10% DISCOUNT NEEDS 33% MORE VOLUME

Break-even is fixed costs divided by the CONTRIBUTION each unit makes: price minus variable cost. A discount does not cut revenue by its own size; it cuts contribution, and contribution is the smaller number.

On a $100 price with $60 of variable cost (a 40% contribution margin), a 10% discount needs +33% more volume to stand still. A 20% discount needs +100%. A 30% discount needs +300%.

Ten percent off the price is a quarter of the margin. That is the whole mechanism, and it is why "just give them 10%" is the most expensive sentence in a small business.

Worse on a thin margin: at a 30% contribution margin a 30% discount is impossible at any volume. There is nothing left to contribute, so no quantity covers the fixed costs.

Includes a discount table at four contribution margins to keep by the phone, the margin of safety calculation, and eight scripts. Plus a live Excel workbook.

8 CLIENT SCRIPTS

Each one carries a line explaining why it is worded that way, because a script you do not understand is one you will not send. Placeholders are in [BRACKETS] so nothing goes out in someone else's words.

 - The customer who asks for 10% off

 - Quoting a volume order that is not worth the discount

 - Raising a price when a variable cost moves

 - Declining to match a competitor's price

 - Explaining a minimum order quantity

 - The wholesale enquiry at retail-minus-40%

 - Telling a long-standing customer the discount is ending

 - Choosing which product to discontinue

WHAT THIS IS NOT

These numbers are not a market price. They are arithmetic about you: what your income target requires. They do not tell you what your market will pay.

These are scripts, not contracts, and nothing here is legal or tax advice. The 25% tax figure is a placeholder; ask your accountant for yours.

FORMAT

Two printable PDFs (US Letter and A4, 14 pages each) plus an editable Excel workbook. Files are available immediately after purchase; nothing ships.

REFUNDS

If this isn't what you expected, email me within 30 days and I'll refund you in full, no need to explain.