Discount and margin calculator
The formula, a worked example, and the error this particular calculation tends to produce.
How it works
A discount comes off the selling price, but the cost does not move — so the margin falls much faster than the discount suggests. This shows how far.
The formula
price after = list × (1 − discount) new margin = (price after − cost) ÷ price after
- Open the "Cost to shelf" tab and enter your unit cost.
- Enter the margin you price at, then the discount you plan to run.
- Read the margin you actually keep after the discount.
Worked example
| Item | Value |
|---|---|
| Cost | ₹1,000.00 |
| Selling price | ₹1,666.67 |
| Discount | 20% |
| Price after discount | ₹1,333.34 |
| Margin | 25% |
The mistake to avoid
Assuming a 20% discount costs 20% of the margin. On a 40% margin, a 20% discount leaves 25% — it takes well over a third of the profit, not a fifth.
Questions people ask
What is the difference between margin and markup?
Markup is profit as a share of cost; margin is profit as a share of the selling price. Cost 100 with a 50% markup sells at 150; cost 100 at a 50% margin sells at 200. They agree only at zero, and the gap widens as the percentage rises — at a 70% target the difference is more than double.
Should I apply my margin before or after tax?
Before. Consumption tax is collected on behalf of the government and was never your revenue, so the margin belongs on the tax-exclusive price. Taking the margin on the tax-inclusive figure understates your real margin and underprices the item.