Recover the contribution, not just the revenue.
A discount reduces selling price while unit costs may remain unchanged. At the same volume, the model separates the effect on revenue, gross profit after COGS and contribution after all variable costs. These amounts are not interchangeable when evaluating a commercial concession.
The required-volume calculation asks how many discounted units would preserve the positive baseline gross profit or contribution. It does not assume that demand will respond to the discount. If discounted unit contribution is zero or negative, additional sales cannot recover a positive baseline contribution. Capacity constraints and extra fixed costs can also prevent the modeled offset.
The formula, made clear.
- Gross profit
- Revenue less entered COGS; other variable selling costs are excluded.
- Contribution
- Revenue less both COGS and other variable costs, before fixed costs.
- Required volume
- Unrounded mathematical volume to preserve a positive baseline amount; whole-unit sourcing is rounded up separately.
Put the numbers in context.
Discounting $100.00 by 20% gives $80.00. With $40.00 COGS and $10.00 other variable costs, unit contribution falls from $50.00 to $30.00. Preserving the contribution from 1,000 original units requires 1,666.67 units mathematically, or 1,667 whole units.
| Input | Example value |
|---|---|
| Price before the discount | $100.00 |
| Commercial price discount | 20% |
| COGS per unit | $40.00 |
| Other variable cost per unit | $10.00 |
| Baseline units sold | 1,000 units |
| Units to preserve positive baseline contribution | 1,666.67 |
What this calculation assumes
One constant sales mix; unchanged per-unit COGS and other variable costs. Costs scale with volume and fixed costs do not change. No elasticity, capacity response, commission-rate recalculation, churn, customer acquisition cost, financing or tax model. Zero or negative baseline profit has no positive amount to preserve; zero discounted price has undefined margin percentages.
Methodology references
What to consider next.
Compare the required volume uplift with attainable demand and capacity. Recalculate costs if the larger volume changes delivery, commissions or fixed overhead.
How we approach financial models →