Use these tables to work out exactly how adjusting your prices will affect your gross profits.

(Use your last twelve months financial figures to give accurate figures then project the next twelve months)

DISCOUNTING PRICE TABLE
(Your gross profit percentage)

 

Discounting by 10% 15% 20% 25% 30% 35% 40%
5%
100% 50% 33.3% 25% 20% 16.7% 14.3%
6% 150% 66.7% 42.9% 31.6% 29% 20.7% 17.6%
7% 233.3% 87.5% 53.8% 38.9% 30.4% 25% 21.2%
10% 200% 100% 66.7% 50% 40% 33.3%
11% 275% 122.2% 78.6% 57.9% 45.8% 37.9%
12% 400% 150% 92.3% 66.7% 52.2% 42.9%
15% 300% 150% 100% 75% 60%
20% 400% 200% 133.3% 100%

As the table suggests you need to be careful when discounting, as the amount you sell will have to be increased significantly to keep profits where they are now.

Eg 1: If your gross profit is 20% and you discount by 10% it effectively means you need to sell 100% more to keep your gross profit at 20%!

Eg 2: If your current gross profit is 15% and you offer a 10% discount then you will need to sell a massive 200% more to keep your profit at 15%!

Before discounting a line of products or services work out how much business in the current economic climate and whether you can survive if the discounting fails.

PRICE INCREASE TABLE

(Your present profit margin)

 

Increasing prices
by
20% 25% 30% 35% 40% 45% 50%
2% 9% 7% 6% 5% 5% 4% 4%
4% 17% 14% 12% 10% 9% 8% 7%
6% 23% 19% 17% 15% 13% 12% 11%
10% 33% 29% 25% 22% 20% 18% 17%
12% 38% 32% 29% 26% 23% 21% 19%
16% 44% 39% 35% 31% 29% 26% 24%
20% 50% 44% 40% 36% 33% 31% 29%
25% 56% 50% 45% 42% 38% 36% 33%

This table is the opposite of the previous table with the increase in prices showing that you can lose a certain percentage of sales without it affecting your profits.

Eg: 1 If your present profit margin is 40% and you increase your prices by 10% then you can afford to lose 20% of your sales before your gross profits are adversely affected.

Eg: 2 With a profit margin of 20% you can increase your prices by 25% and lose up to 56% of your sales before losing profits.