How many sales you can afford to lose
Let the price be P, the number of sales Q, the margin m (the share of the price left after variable costs: purchases or materials, delivery, packaging) and the price increase p (a share of the old price).
- Profit before the increase: m × P × Q.
- After the increase each sale leaves (m + p) × P: costs in hryvnias stay the same, and the whole increase goes to profit.
- Profit does not fall as long as sales stay at Q′ such that (m + p) × P × Q′ = m × P × Q.
So Q′ ÷ Q = m ÷ (m + p), and the share of sales you can afford to lose is:
loss = p ÷ (m + p)
The equality is exact if variable costs per unit do not depend on the price and do not change. Fixed costs (rent, salaries, subscriptions) are not in the formula: they are the same before and after the increase, so it is enough to compare profit before them.
The formula mirrors the calculation for a discount that does not reduce profit, where the required growth in sales is d ÷ (m − d). The change of sign makes the result asymmetric. At a 30% margin a 10% discount needs 50% more sales, while a 10% increase lets you lose 25%.
Calculated with p ÷ (m + p) at p = 10%, 9 November 2026. Margin is the share of the price left after variable costs.
A thin margin looks like a reason to leave the price alone. The calculation says the opposite: this is where an increase adds the most profit per unit. At a 15% margin a 10% increase raises the profit on a sale by two thirds.
A table for your margin
The share of sales you can afford to lose for typical combinations of margin and increase.
| Margin before the increase | Price +3% | Price +5% | Price +10% | Price +15% | Price +20% |
|---|---|---|---|---|---|
| 15% | 17% | 25% | 40% | 50% | 57% |
| 20% | 13% | 20% | 33% | 43% | 50% |
| 30% | 9% | 14% | 25% | 33% | 40% |
| 40% | 7% | 11% | 20% | 27% | 33% |
| 50% | 6% | 9% | 17% | 23% | 29% |
| 60% | 5% | 8% | 14% | 20% | 25% |
Take the margin from the calculation of one sale, not from the gap between purchase and retail price. In the illustrative example from the article on online shop unit economics, a 45% markup leaves 15% of the order value after delivery, fees, refusals and advertising. An understated margin in this formula gives a larger allowable loss and an overstated one a smaller loss, so an error in the margin carries straight into the decision.
The table can also be read as a threshold for how sensitive buyers are. The number in a cell divided by the increase shows what percentage of sales you can lose for each percent of price. For a 30% margin and a 10% increase that is 2.5. If your buyers react less than that, the increase adds profit.
An example with 200 sales
An illustrative business: 200 sales a month, a price of UAH 1,000, variable costs of UAH 650 per unit, a 35% margin.
- Profit before the increase: 200 × 350 = UAH 70,000.
- The price goes up by 8%, to UAH 1,080. Each sale leaves UAH 430.
- Allowable loss: 8 ÷ (35 + 8) = 18.6%. Profit holds if at least 163 sales remain.
| Sales after the increase | Change | Profit | Against the profit of UAH 70,000 |
|---|---|---|---|
| 200 | 0% | UAH 86,000 | +UAH 16,000 |
| 180 | −10% | UAH 77,400 | +UAH 7,400 |
| 163 | −18.5% | UAH 70,090 | +UAH 90 |
| 150 | −25% | UAH 64,500 | −UAH 5,500 |
For services limited by time this calculation has a second result. A tradesperson or consultant who lost 15% of clients after the increase earns more and has 15% less workload. The free hours can be sold to new clients at the new price.
Correction for costs charged as a percentage of the price
The formula assumes the business keeps the whole increase. That is not the case when some costs are charged on the price: a payment fee, a marketplace commission, a turnover tax. They take their share c of every hryvnia of the increase, and p × (1 − c) reaches profit.
loss = p × (1 − c) ÷ (m + p × (1 − c))
Here the margin m is taken after these percentage costs. An illustrative example: a price of UAH 1,000, percentage costs of 7% in total, other variable costs of UAH 580, so a sale leaves the same UAH 350. An 8% increase adds UAH 74.40 instead of 80, and the allowable loss is 17.5% instead of 18.6%.
The correction is small while percentage costs are low. On a marketplace it shows: the article on a marketplace versus your own shop works through an example with a 15% category commission, and at that rate 85 kopiikas of every hryvnia of the increase reach profit.
What to calculate when costs go up
A different situation: the price is raised because purchases, materials or delivery have become more expensive. Then the answer depends on the baseline: the profit you had before costs rose, or the option of leaving the price as it is.
The same illustrative business: a price of UAH 1,000, variable costs up from UAH 650 to 690. If nothing is done, a sale leaves UAH 310 and monthly profit falls from UAH 70,000 to 62,000.
| New price | Per sale | Allowable loss against the old profit | Allowable loss against leaving the price unchanged |
|---|---|---|---|
| UAH 1,000 (no change) | UAH 310 | profit is already lower | — |
| UAH 1,040 (+4%) | UAH 350 | 0% | 11.4% |
| UAH 1,080 (+8%) | UAH 390 | 10.3% | 20.5% |
| UAH 1,100 (+10%) | UAH 410 | 14.6% | 24.4% |
The table gives a rule. Raising the price by exactly the rise in costs (here UAH 40) restores the old profit per unit but leaves no headroom: the old monthly profit survives only if not a single customer leaves. To have headroom for churn, the price has to go up by more than costs did.
The second column answers a different question: is raising the price better than leaving it. Here there is always headroom, and it is larger than before costs rose, because the margin is now lower. After costs go up, not raising the price is also a decision with a price tag: UAH 8,000 a month in the example.
If you want to keep the margin as a percentage and not the hryvnias per unit, the price has to rise by the same percentage as variable costs. In the example 690 ÷ 650 gives +6.2%, or UAH 1,062. For goods bought in foreign currency, the rise in purchase cost caused by the exchange rate is calculated separately, in the article on currency risk in a product price.
Calculator
Enter your own price and costs. The default values are the example from this article with no rise in costs.
How to check after the increase
The allowable loss is a threshold, not a forecast. The formula does not know how many customers will actually leave, and we have not measured it: that depends on the product, the competitors and how long ago the price last changed. It can only be checked on your own sales.
- Do you know the margin on one sale after all variable costs?Without it the threshold cannot be calculated. No → work out the margin first
- Have you calculated the minimum sales, Q × m ÷ (m + p)?Write it down in units per week or month before the increase. Yes → this is the number you will compare the actual result with
- Can you raise the price on part of the range?Start with the items where the margin is lowest: the allowable loss is largest there. Yes → the rest of the range serves as the comparison
- Has the same length of time passed since the increase as in the comparison period?Compare units, not revenue. Sales above the minimum → the price stays
Count the number of sales specifically. Revenue can grow after an increase even when profit has fallen, and average order value rises from the price change alone, with no change in how buyers behave.
If the increase coincided with a seasonal shift in demand, a comparison with the previous month shows nothing. Compare with the same weeks of last year or with the items whose price did not change.
The formula sees only one month. A customer who leaves takes future purchases too, so a business with repeat sales should take the threshold with a reserve; what a customer brings over the whole relationship is covered in the article on customer value.
Our position
Before raising a price, work out how many customers can leave with no loss of profit. At margins from 15% to 40%, an increase of 5–10% absorbs a loss of 11% to 40% of sales, and that number is worth knowing before you talk to customers. If the increase only covers higher costs, there is no headroom for churn, so raise by more than costs went up or do not expect the old profit.
The position does not hold if the sale is the entry point to later ones: a cheap first service followed by expensive ones, or a product people come for and then buy the rest of the basket. There a lost customer costs more than the profit on one sale, and the threshold from the formula is too high. It also does not hold when the price is fixed by a contract or a tender: first check whether its terms allow a price change.
The formulas were derived and recalculated in code on 9 November 2026; all amounts and percentages in the article are calculated. The numerical examples are illustrative and are not data from any particular business.