Two pricing questions
This calculator separates two decisions that are often confused. Low Price Justification estimates how much truly additional volume is needed to offset lower profit on an existing business. New Business Pricing estimates a price threshold when evaluating business that is not expected to replace current sales.
Low Price Justification
A discount reduces contribution on units that would have sold at the old price. The mode compares that loss with the contribution earned on additional, non-overlapping sales. “Non-overlap” matters: orders shifted from one customer, period, or channel to another are not necessarily incremental and should not be counted as new volume.
New Business Pricing
For genuinely new demand, the relevant floor may depend on incremental cost, available capacity, strategic benefits, and the probability that the opportunity displaces existing business. The mathematical result is a scenario boundary, not permission to ignore overhead, channel conflict, future price expectations, or contractual obligations.
Use scenarios, not one forecast
Run conservative, expected, and optimistic cases for volume and overlap. Then examine whether the required volume is credible given market size, sales capacity, competitor response, and operational constraints. Preserve the assumptions with the decision so the analysis can be revisited when actual orders arrive. This tool supports internal planning and does not provide accounting, legal, or investment advice.
Common questions
What counts as overlap? Volume that replaces business expected at the old price should not be treated as fully incremental. Should fixed costs be included? Include decision-specific investments in a separate scenario when they are required to win the business. What if capacity is limited? Use the contribution of the displaced opportunity as an economic cost. A price that appears profitable with unused capacity may be unattractive when it prevents a higher-contribution sale.
Related tools: Profit Margin, Feature Cost Tradeoff, and Loan Calculator.