💥 Why Discounting Rarely Grows Profit — Part 2

Price cuts rarely help you hit revenue goals — and they almost never protect profit. 😲

In a previous post (Part 1), we showed how the volume needed to keep profit steady is often unrealistic.

Here’s Part 2 — and it reveals the next mistake:

👉 Skipping the elasticity check.

Watch the video above to see the elasticity needed to hit profit targets for:

🔸Margins from 5% → 80%

🔸Discounts from 1% → 20%

🔸Profit goals from –10% → +10%

Here’s what the data makes clear:

1️⃣ Normal elasticity ranges (Low 1.0–1.5, Medium 1.5–2.5) are rarer in discount scenarios.

2️⃣ Higher profit goals shrink the feasible elasticity zone. Hitting them becomes very hard.

3️⃣ If your discount > margin, you will lose profit. No exceptions.

Why does it matter?

Because many teams set profit targets on top of discounts that have no path to success. 😲

How to check?

➡️ Estimate elasticity

You can use a simple formula that converts price change, margins, and target profit changes into elasticity:

e = (pr-p/m)(1+p/m)/p
(pr,p: % change of profit, price - m: margin - e: elasticity)

➡️ Check against your market

If the elasticity is far from how your market behaves, your target is not realistic.

Run this check before your next discount meeting — it helps prevent surprises.

Interested in learning more about AI-Powered Price Optimization and Strategic Forecasting?