How to Figure Margin From a Discount
Discounts can make a heavy impact on a company's margin, the amount deducted from the selling price of a product, which cuts down the profit for the company. Companies can compare margin, sales and volume to try and find price points for products where the company most succeeds. Sometimes, a discount will lower the margin on a product but may lead to increased sales and therefore higher profits overall.
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Instructions
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Find the current selling price of the product.
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Calculate the total cost associated with making the product.
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Put the discount in dollars and cents, if it is not already. For example, a 50 percent discount on an item that normally sells for $20 would be a $10 discount.
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Subtract the total cost and the discount amount from the current selling price. This computation will give you your profit in a dollar amount per product sold.
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Divide the profit amount by the selling price. Multiply by 100. This will give you margin, also sometimes known as gross margin percent.
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