Free Management-Accounting Tool
Enter a product's price, cost and overhead shares, and this tool measures whether a proposed discount still leaves your pricing efficient — then builds the sales budget you'd need to hit your profit target anyway.
Illustrative reading — your result appears here after you calculate
The Sales Discount Budget tool answers a deceptively simple question: can we actually afford to give this discount? It takes five numbers you already have on hand — the unit price before and after a proposed discount, the unit cost, and the product's fair share of overhead expenses and of the business's assets — and turns them into an objective read on pricing efficiency, plus a ready pro-forma budget built around the performance level you're aiming for.
Discounting decisions are usually made under pressure — a competitor undercuts you, a client pushes back on price, a slow month needs a boost — and are often settled on instinct. This tool exists to give that decision a quantitative floor: a way to check, in under a minute, whether a specific discount keeps your product's pricing inside a healthy efficiency range, and if not, precisely how much additional volume would be needed to compensate.
Before agreeing to a price cut, see whether it still leaves the product in an acceptable efficiency band.
Convert an abstract discount percentage into a concrete extra-sales-value requirement your sales team can plan against.
Walk into a pricing negotiation or an internal review with a one-page budget instead of a gut feeling.
The evaluation runs in five steps, each one feeding the next.
You provide the unit price before and after the discount, the unit cost, and the product's fair share of both overhead expenses and total assets for the period.
For each price point, the tool applies the same ratio, shown below. It compresses the whole margin structure into a single number: the closer it sits to 1, the more of the price above cost is genuine profit rather than a thin margin stretched across a large price tag.
Each standard is read against a six-band scale — Excellent, Very Good, Good, Acceptable, Poor, Very Poor. Comparing the "before" and "after" bands shows at a glance whether the discount pushes the product down a tier.
Using the asset share and your chosen target degree (Good, Very Good or High Very Good), the tool works back from a profit target to the sales and purchase values that would deliver it — once at the pre-discount price, once at the post-discount price.
The difference between the two resulting sales-value lines is the extra revenue the discount asks of you. That figure is the real, negotiable cost of the discount.
All six fields are required and should refer to the same product and the same accounting period.
| Field | What to enter | Example |
|---|---|---|
| Sale price before discount | The normal, undiscounted unit price. | 100.00 |
| Sale price after discount | The unit price once the proposed discount is applied. | 85.00 |
| Unit cost | The direct cost to produce or acquire one unit. | 60.00 |
| Share of general expenses | This product's fair allocation of overheads — rent, salaries, admin — for the period. | 5,000.00 |
| Share of total assets | This product's fair allocation of the business's fixed and current assets. | 40,000.00 |
| Target efficiency degree | The performance level the resulting budget should be built around — Good, Very Good, or High Very Good. | Good |
Every calculation returns three blocks, read together.
The needle shows the classification of the "after discount" standard, with the "before discount" band noted alongside it, so you can see instantly whether the discount pushed the product down a tier.
Sales value, purchase value, gross profit, expenses and net profit, rebuilt at your chosen target degree — once at the pre-discount price, once at the post-discount price, both aimed at the same net-profit target.
The gap between the two sales-value lines — the additional revenue, in extra volume, you need to generate to keep your profit target intact once the discount is granted.
A product priced at 100 is being discounted to 85. Here's what the tool returns.
Target degree: Good
Before discount: (100 − 30) ÷ (100 − 60) = 1.75 → Excellent
After discount: (85 − 30) ÷ (85 − 60) = 2.20 → Very Good
The discount nudges the product down one band — from Excellent to Very Good — still a healthy result, not a red flag.
| Before | After | |
|---|---|---|
| Sales value | 25,000.00 | 34,000.00 |
| Minus purchase value | 15,000.00 | 24,000.00 |
| Gross profit | 10,000.00 | 10,000.00 |
| Minus expenses | 5,000.00 | 5,000.00 |
| Net profit | 5,000.00 | 5,000.00 |
All fields are required. Figures may use plain numbers or thousands separators (e.g. 40,000).
Fill in the form and calculate to see your product's efficiency reading here.