Floor price: negotiate without burning your profit
A 10% discount can wipe out a third of the gross profit on an item. A minimum price and approval rules help staff decide during the sale.
"Can I get ten percent off?" Before you answer, it helps to know how much is left for the business after the discount. A floor price is the minimum price the owner sets for an item. It gives staff a clear limit for negotiating and sends decisions that go beyond it to a manager.
How much does a 10% discount really cost?
In the example below, all amounts are on the same basis, without VAT, and the unit cost stays fixed. A product sells for ₪100 and costs ₪70, so the gross profit is ₪30. After a ₪10 discount, ₪20 is left: the discount is 10% of the selling price, but a third of the gross profit per unit.
| Figure | Full price | After the discount |
|---|---|---|
| Selling price | ₪100 | ₪90 |
| Product cost | ₪70 | ₪70 |
| Gross profit per unit | ₪30 | ₪20 |
| Units for ₪300 gross profit | 10 | 15 |
In the example, you need to sell 50% more units to reach the same gross profit. That is not a 50% increase in turnover: the price of the units went down. The calculation also leaves out other expenses that may grow with sales.
How do you set a minimum price?
Add up the product cost, shipping and other direct costs, and decide how much minimum contribution needs to stay with the business. Include card processing, packaging or delivery when they apply. Make sure you work on a consistent VAT basis.
In a simple example, a cost of ₪70 and a required contribution of ₪20 give a floor of ₪90 before other variable expenses. If a fee is a percentage of the price, calculate it accordingly. Adding a round number without checking can miss the target.
The floor price does not have to stay the same for the product's whole life. For an item that is aging or damaged, you can decide differently after checking the cost and the expected return. Record a deliberate change instead of leaving staff to improvise at every sale.
What do you set up for staff on the register?
- In the product details, set the selling price, the minimum price and whether negotiation is allowed.
- In the employee permissions, set the discount range and the approval authority.
- Practice changing a price on the cart line and check the result.
- Test a request to go below the floor with a regular user and with a manager.
In KupaLi, tapping the price on the cart line opens the price change. The actual limit depends on both the product and the employee's permissions. Going below the minimum price needs the right approval. See the register screen guide and setting up products and users.
Can you give value without cutting the price?
Sometimes packaging, a service or an add-on product matters more to the customer than a discount. Check their real cost: "free" delivery still costs the business money, and a gift product needs to come off stock.
For example, an accessory that costs ₪12 and normally sells for ₪49 can be an alternative to a ₪49 discount, if the customer needs it. Offer a benefit that will actually be used, and calculate the profit on the whole basket.
What do you check at the end of the month?
Compare discounts by product, employee and type of transaction. Check how much money was left after discounts, how many exception approvals were given and whether the items sold at a discount really were stock you wanted to clear. Two employees with the same turnover may reach it with a different mix, so a single figure is not enough to judge.
When the same product goes over the limit again and again, check whether the floor, the shelf price or staff training needs updating. Cost and stock analysis is only useful if stock movements are recorded correctly.
And what does the customer see?
The floor price is an internal tool. The price shown to the consumer and the terms of a promotion must follow the price display rules. Negotiation does not cancel them. Check the Consumer Protection Authority's price display guidelines (in Hebrew), and show a clear price and benefit terms before payment.
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What else do people ask?
Does a 10% discount always require 50% more sales?
No. In the article's example, the profit per unit falls from ₪30 to ₪20, so 50% more units are needed for the same gross profit. The result changes with the cost, the price and the variable expenses.
Does a minimum price remove the manager's judgment?
No. It sets the limit for day-to-day work. Going beyond it can be a deliberate decision by someone with the right permission, for example for a damaged item or aging stock.
How do you change the price of one item in KupaLi?
Tap the price on the item's line in the cart. Permissions and the minimum price set how far you can change it. Going below the floor needs the right approval.