Intermediate level · Module 2: Pricing Strategy · Lesson 3 of 3
Break-Even, Discounts and Price Changes
Know how much you must sell and change prices carefully.
In this lesson you will
- Calculate break-even volume
- Plan discounts and price increases
Key concepts
break-evencontributiondiscount effectcommunicating price changes
The lesson
Break-even volume = fixed costs ÷ (price − variable cost). Below it you lose money.
Discounts cut profit on every unit; use them for clear goals such as clearing old stock or rewarding loyal customers.
When costs rise, increase prices with notice and explain why; customers accept honest, gradual changes.
Step by step
- Calculate break-even.
- Test a discount's effect on profit.
- Write a discount rule.
- Draft a price-change message.
Practice activity
Write your pricing policy.
Expected result: A policy with break-even, discount and price-change rules.
Check your understanding
-
Give the break-even formula.
Show answer
Fixed costs ÷ (price − variable cost).
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When should discounts be used?
Show answer
For clear goals such as clearing stock or rewarding loyalty.
Taught live by an instructor — online or in person. Free course lessons are for self-study and do not lead to a certificate — see registration options.