Product Cannibalization Impact Simulator

Model how much gross profit a new SKU contributes after subtracting the legacy contribution margin you expect to cannibalise. Enter the selling price, unit cost, annual unit forecast, and the per-unit margin of the existing offer to quantify the net upside in dollars.

Total selling price for one unit of the new offer.
Include manufacturing, fulfilment, and variable costs per unit.
Projected units sold of the new product in 12 months.
Contribution margin you currently earn for each unit cannibalised.
Optional. Leave blank to assume 0% or enter the share of new sales replacing the legacy SKU.

Financial projections are estimates. Validate with your finance or strategy team before committing to pricing changes.

Examples

  • $42.00 price, $18.75 cost, 7,200 units, $14.00 legacy margin, 25% cannibalisation ⇒ Result: $142,200.00 incremental gross profit
  • $18.50 price, $8.10 cost, 5,200 units, $19.00 legacy margin, 0% cannibalisation (optional left blank) ⇒ Result: $54,080.00 incremental gross profit

FAQ

What does a negative result mean?

A negative incremental gross profit indicates the new product destroys more margin than it creates—typically because cannibalisation is high or the new unit margin is lower than the legacy offer. Revisit pricing, packaging, or positioning to protect the base SKU.

How should I estimate the cannibalisation rate?

Start with historic launch data, A/B tests, or customer survey intent to estimate the share of new orders that would have purchased the existing SKU. Many teams model a base case, best case, and worst case to bracket the likely range.

Should I include fixed costs in this calculator?

No. This simulator isolates contribution margin. Layer in launch marketing, R&D amortisation, or tooling costs in a separate ROI or payback analysis to decide whether the project clears your hurdle rate.

Additional Information

  • The simulator outputs incremental gross profit (USD) for a 12-month forecast using the format $#,###.00.
  • Cannibalisation rate represents the share of new-product units that would have purchased the legacy SKU without the launch.
  • Unit forecasts should include the full volume you expect to sell, combining net-new demand and cannibalised buyers.
  • Use contribution margin (price minus variable costs) so the result reflects the profit impact before fixed overhead.
  • Result unit: USD

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