The effect on profit of price changes

Increasing Prices

Price increases can have a significant positive effect on business profit.
Use the table below to see how many sales you can afford to loose as a result of a price increase before you become worse off.
For example, if you are earning 30% gross profit and you increase your prices by 5% you can afford to loose 14% of your sales volume before your total gross profit reduces.

The amount that sales can fall (%) before total gross profit reduces

Current Gross Profit %		10	15	20	25	30	35	40	50
Price Increase %	2	17	12	9	7	6	5	5	4
	3	23	17	13	11	9	8	7	6
	4	29	21	17	14	12	10	9	7
	5	33	25	20	17	14	12	11	9
	10	50	40	33	29	25	22	20	17
	15	60	50	43	37	33	30	27	23

Reducing Prices

However price reductions have a surprisingly large negative effect on profit.
Use the table below to see how many more you need to sell to be better off when you reduce your prices.
If you are earning 20% gross profit and you reduce your prices by 5% you will have to double the number you sell to be earning more profit.

The amount that sales must rise (%) before total gross profit increases

Current Gross Profit %		10	15	20	25	30	35	40	50
Price Reduction %	2	25	15	11	9	7	6	5	4
	3	43	25	18	14	11	9	8	6
	4	67	36	25	19	15	13	11	9
	5	100	50	33	25	20	17	14	11
	10		200	100	67	50	40	33	25
	15			300	150	100	75	60	43

Try out our online price change calculator or read more about pricing