The ICBA Unit Growth vs. Discounting Worksheet is a tool to help you assess the impact on profitability when offering price discounts (HINT: When discounting, you have to sell many more units than you might think, just to stay even on margin dollars!).
Discounting merchandise, either temporarily as a sale, or permanently as a markdown, is part of every retailer’s merchandise management processes. There are many good and legitimate reasons to run temporary sales or take permanent markdowns. However, it is very important to understand the impact on discounting to profitability in terms of “margin dollars.”
This new tool will help you determine how many more unit sales are needed to break even on margin dollars. It varies greatly based on the natural margin ranges of various categories (e.g. supplies vs. tech products vs. apparel, etc.).
Keep all of this in mind and make informed decisions when determining exactly how much to lower prices (and how it may impact unit sales and margin dollars)!