Markdown & Promotion Planner

The Margin Math of Promotions

A promotion trades margin rate for volume. Cutting a $3.49 item to $2.50 against a $1.85 cost takes the per-unit margin from $1.64 to $0.65, a 60% reduction, and the only way the week earns the same gross profit dollars is for units to make up the difference. The math is unforgiving: the deeper the cut relative to margin, the steeper the lift required. That relationship is nonlinear, which is why a promo price that "only" drops a dime more can quietly double the lift needed to break even, and why a promo at or below cost can never break even at any volume.

Breakeven Lift: The Number to Know Before Signing an Ad

Expected lift is a forecast; breakeven lift is arithmetic. If the breakeven is a 152% unit increase and the item has never lifted more than 80% on its best ad, the promotion loses margin dollars before the first sign is printed, and the conversation should turn to vendor funding, a shallower price, or a different item. Running the breakeven before committing turns "the ad looks good" into a number you can defend. This planner also totals the impact over the full promo period, because a two-week event doubles whatever the weekly gap is. For the price-point side of the decision, the Vendor Cost Change Impact Calculator covers cost-driven repricing, and the Shrink & Waste Calculator covers the markdown-to-shrink side for perishables.

Measuring What the Promo Actually Did

The plan uses an expected lift; the truth lives in POS movement after the event. I build promotion analysis reporting that pulls actual sales by item, store, and week, compares promo performance against baseline, and shows which events paid for themselves and which just moved the same units at a lower margin. See grocery and retail services or explore custom reporting.