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The Discounting Impact Calculator
Understand the Effect of Discounting on your Profits
Joe is unhappy with his business. He hopes that by discounting his prices he can increase his sales and improve his bottom line. What guidelines does he have to help him decide whether or not it is a good strategy?
The calculator below gives some clues. The discounting calculator is a fantastic tool to help you can an appreciation of how discounting will impact upon your business. You enter the key financial data from your profit and loss statement (Sales, Gross Profit, Expenses) and then make a decision about the discount you would like to try.
The model will then calculate your summarised profit and loss statement before and after discounting. The it will display a mini report based on your input that will tell you among other things what level you need to increase your sales by in order to hold your current level of net profit.
There is a complementary calculator that will explain to you the mathematics of doubling your profitability. If you are new to business you should visit how to start a business.
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We often feel that it is necessary to discount our prices to try to attract more customers. But how often do we calculate the impact that the discounting is having on our business. Try these calculations - you may get a surprise |
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