What a 10% Discount Really Costs a Small Business

A discount can bring in customers. Whether it improves the business depends on what those sales contribute after the cost of delivering them.

That calculation matters when owners face pressure from both suppliers and customers. NFIB’s May 2026 survey, released June 9, reported a seasonally adjusted net 36% of owners raising average selling prices. A net 34% planned increases over the next three months. [1]

Those are national findings, not NWA-specific pricing data. “Net” is the share reporting increases minus the share reporting decreases; it is not the size of a price increase.

Work through the sale before announcing the offer

Imagine a hypothetical service priced at $100 with $60 in variable costs. Each sale contributes $40 toward overhead and profit.

Now apply a 10% discount while keeping the delivery cost unchanged:

The customer saves $10. The business gives up 25% of its contribution per sale.

At the regular price, 30 transactions contribute $1,200. At the discounted price, reaching that same contribution takes 40 transactions—roughly 33% more volume. This assumes costs and capacity otherwise remain unchanged.

Can the business deliver the extra volume?

The arithmetic becomes more demanding if those additional transactions require overtime, another delivery run, extra materials, or more support.

A promotion that fills unused capacity can have different economics from one that displaces bookings customers would have made at full price. Evaluate the offer against what would likely happen without it, including the timing and type of customers it attracts.

Look beyond the first purchase

A discount may make sense if it produces profitable repeat business. That outcome needs evidence.

Track how many customers are new, how many return, what they buy later, and what it costs to serve them. Revenue from the promotion alone cannot show whether the offer built a stronger customer base.

Keep cash timing in the picture

An order can be profitable on paper while requiring inventory, labor, or other spending before the customer pays. More orders can increase the cash needed to operate.

Before launching a promotion, examine contribution per sale, realistic capacity, expected repeat purchases, and payment timing together. Consider whether a different package or a narrowly targeted offer would meet the same goal with better economics.

For NWA businesses, a promotion should earn its place in the plan. The useful question is how it improves the business after the additional work and costs are counted.

Have you run an offer that increased sales but disappointed on profit—or one that worked well? Share what you learned at Joanna.bunten@gmail.com.

Source: NFIB: May 2026 survey, released June 9. National survey findings; all service and promotion calculations are hypothetical.