Guide
A "quick" 10% off looks harmless until you work out how many extra jobs it takes to earn the same profit. Here's the formula, the numbers by margin band, and four things worth trading before you cut price.
When a customer asks for 10% off, most tradespeople think in terms of revenue: "I'll still be making 90% of the price." But discounts don't come off revenue, they come off profit. And profit margins in most trades are a lot thinner than the discount you're being asked to give.
If your gross margin is 20%, a 10% discount doesn't cost you half your margin. It costs you half of it in percentage points, but the volume needed to replace that lost profit is far higher than most people guess. This is the calculation nobody does at the point of sale, and it's the one that actually matters.
Here's the maths. Define:
The required volume lift to keep total gross profit unchanged is:
Required volume lift = old margin ÷ (old margin − discount) − 1
Worked example: your margin is 30% and you offer 10% off. That's 0.30 ÷ (0.30 − 0.10) − 1 = 0.30 ÷ 0.20 − 1 = 1.5 − 1 = 0.5, or a 50% increase in volume, just to stand still. You'd need to do half as many jobs again as before, for the same total profit.
Check your current gross margin properly before doing this maths on a guess. The markup and margin calculator will give you the real figure from your costs and prices, not a rough feel.
The lower your starting margin, the more brutal a flat 10-point discount becomes. Here's what a 10% discount actually demands across margin bands common in trade work:
| Starting gross margin | After 10% discount | Volume increase needed |
|---|---|---|
| 40% | 30% | +33% |
| 30% | 20% | +50% |
| 20% | 10% | +100% |
| 15% | 5% | +200% |
At 15% margin, a 10% discount means you need to triple your job count to hold profit steady. That's not a rounding error, it's the difference between a business that survives a quiet quarter and one that doesn't.
Notice the pattern: as starting margin gets thinner, the same discount eats a bigger share of it. That's because the discount is fixed in percentage points but margin is what's left after costs, and costs don't move.
A simple rule that keeps you out of the danger zone: never discount more than one third of your gross margin percentage.
So if your margin is 30%, the most you should discount is around 10 points, that's the 30/20 example above, needing +50% volume. If your margin is 20%, cap any discount at roughly 6-7 points. Anything more and the volume lift required becomes unrealistic for most trades, because getting 100% or 200% more work in the same window usually means hiring, more vans, more admin, and a lot of risk for no extra profit.
Before agreeing to any discount, run the numbers on the specific job with the job profitability calculator. It'll tell you exactly what's left after materials, labour and overhead, before you commit to a lower price.
It's tempting to think "I'll just do a few more jobs a month." But +50% volume on a 30% margin business isn't a few extra jobs, it's half your current annual job count added on top, with the same crew, same tools, same admin hours in the day. That's rarely a free lunch. It usually means:
Check your break-even point before and after any discount policy using the break-even calculator. A discount that looks fine on paper can quietly push your break-even job count up in a way that's hard to reverse once customers expect it.
If a customer wants a lower number, price isn't the only lever. These four options often protect more margin than a straight discount, because they cut your actual cost or improve your cash position rather than just shrinking the number on the invoice.
Drop a line item instead of cutting the whole price. Skip the decorative trim, use a standard fixture instead of the upgraded one, or reduce the finish spec on one room. This directly reduces your material and labour cost, so your margin percentage barely moves. A £2,000 job with £400 of scope removed can hit a £1,700 target price and still hold close to your original margin, because the cost came down too, not just the price.
Offer the discount only for a slot that would otherwise sit empty, a Tuesday morning instead of a Saturday, or a slower month instead of your peak season. You're not losing margin on work you'd have done anyway at full price. You're filling dead capacity that costs you nothing extra to staff. This is close to free margin, because the alternative was an empty slot earning nothing.
Split a big job into stages and only price and deliver the first phase now. The customer gets a smaller number today, you get to invoice the rest later at full rate once trust is built and the first phase proves the work. This avoids discounting the whole job at all, you're just phasing the ask.
Trade a small price concession for payment on the day, or a deposit up front, instead of 30-day terms. A 2-3% reduction in exchange for immediate payment is far cheaper than a 10% discount, and it improves your cash flow directly, which matters more than the invoice total when you're the one carrying material costs until you get paid.
Before any discount conversation, know three numbers: your current gross margin, the volume lift the discount would require, and your break-even point. If the required lift looks unrealistic against your current capacity, don't discount the price, discount the scope, the timing, or the terms instead. The customer often doesn't care which lever you pull, they just want a lower number or a better deal. Give them one that doesn't quietly triple your workload for the same money.
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