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Thinking to discount? Think twice…

The table below will explain to you how the discounting vs. volume of sales works.
In my opinion – it’s better to give your customers an add-on item of good value, then to discount the original item.

For example:

1. With every purchase of the trousers – get a FREE belt value $X;

2. With every purchase of 2 business shirts – get 1 absolutely FREE (effectively 30% discount of RRP – recommended retail price);

3. With every purchased [item X] receive another [item Z] absolutely FREE – this is a good way to move obsolete stock or increase the value of the item X while giving them some promotional item Z, that you got from the suppliers for FREE.

If your Profit Margin is…

If you discount by…

20% 25% 30% 35% 40% 45% 50% 55% 60%

The amount you need your sales volume to increase by to maintain your current profitability level

2% 11% 9% 7% 6% 5% 5% 4% 4% 3%
4% 25% 19% 15% 13% 11% 10% 9% 8% 7%
6% 43% 32% 25% 21% 18% 15% 14% 12% 11%
8% 67% 47% 36% 30% 25% 22% 19% 17% 15%
10% 100% 67% 50% 40% 33% 29% 25% 22% 20%
12% 150% 92% 67% 52% 43% 36% 32% 28% 25%
14% 233% 127% 88% 67% 54% 45% 39% 34% 30%
16% 400% 178% 114% 84% 67% 55% 47% 41% 36%
18% 900% 257% 150% 106% 82% 67% 56% 49% 43%
20% - 400% 200% 133% 100% 80% 67% 57% 50%
25% - - 500% 250% 167% 125% 100% 83% 71%
30% - - - 600% 300% 200% 150% 120% 100%
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