Before you change the price, find the sales hurdle

Walk me through it. Open the Price Change Review in another tab and follow along. Each step takes about a minute.

1. Start with a tempting discount

A product sells for $25, costs $13 per unit to sell, and sells 150 units in a comparable period. You are considering 5% or 10% off.

Open “A tempting discount” in the tool. Before reading the results, ask yourself: how much would sales need to increase for each discount to pay?

Explain the calculation

Current unit contribution is $12, giving $1,800 for the period. At 5% off, each unit contributes $10.75; preserving $1,800 needs about 167.4 units, or 11.6% more. At 10% off, each contributes $9.50; it needs about 189.5 units, or 26.3% more.

Sell at least 168 units at 5% off or 190 units at 10% off to match the $1,800 contribution from 150 units today. If $13 covers only the item and fulfillment adds $2 per unit, the 10% offer needs 200 units to match the revised $1,500 baseline.

2. Separate the calculation from the assumption

The example assumes a 5–20% volume increase for the smaller discount and 10–20% for the larger one. These ranges are invented for illustration.

What should I notice?

The smaller offer could improve or reduce contribution. The larger offer falls short throughout its entered range. At 20% more units, the larger discount generates $4,050 revenue, up from $3,750—but contribution falls from $1,800 to $1,710.

A reasonable next step is to investigate or test the smaller offer, rather than automatically choose the larger discount. If there is a separate goal, such as clearance or acquiring customers, evaluate that goal explicitly.

The useful question: what evidence would make you believe sales can clear the hurdle?

3. Try a price increase

Select “A modest increase.” The example starts at $40 with $24 variable cost and 100 units. Compare $42 and $44.

Why isn’t the higher price automatically better?

At $42, the assumed 3–10% sales decline gives $1,620–$1,746 contribution against a $1,600 baseline. At $44, a wider 10–25% decline gives $1,500–$1,800. The larger increase offers more upside but also a possible shortfall.

That comparison depends entirely on whether the entered ranges are credible. The tool does not estimate customer response or prove that $42 is best.

4. Bring one of your own products

• Use realized selling price after discounts, excluding sales tax.
• Include product cost, fulfillment, shipping subsidy and expected returns. Enter percentage fees separately without counting them twice.
• Use sales from a comparable period when the product was available.
• Enter two candidate changes and, if useful, keep the current price as a third option.
• If you do not have a defensible response range, leave the range section off. The hurdle can still guide a test.

Use Save my review to keep the numbers and assumptions. Nothing is submitted.

Try the Price Change Review Then explore a case

Check your understanding

After trying your own product, see whether you can answer these:

1. Which inputs were difficult to find or interpret?
2. Explain one result in your own words. What does it establish, and what does it not establish?
3. Did you read the response ranges as forecasts? What did you use to choose yours?
4. What would you consider doing next — and what evidence could change your mind?