Calculating Discounts

'Calculating discounts' is the process of calculating a special discounted price offered by a salesperson while purchasing an item at its marked price. Such types of discount activities happen mostly in the sales market in order to increase the sale of goods. The small amount of rebate or the offer given to the customers on the marked price of products is termed as a discount. Let us learn everything about calculating discounts in this article.

Calculating discount is the process of finding the reduction in the price of goods or services offered by the seller or the salesman at the marked price of the product. This percentage of the rebate is usually offered at the marked price. MRP (maximum retail price) of the product is the actual price of an article as declared by the manufacturer. By many times, it is found that different sellers sell a product at different prices. The price of the product decided by the seller is the marked price, which can be equal to or less than the MRP. It is also known as the list price. Selling price is the price at which an article is sold after a small amount of reduction or discount in the list or marked price. Hence, the difference between the list price and the actual selling price is known as a discount.

While calculating discounts, you must have the marked price and the selling price of the product you are purchasing. Following are the listed formulas we use while calculating discounts.

• Discount = Listed Price - Selling Price
• Selling Price = Listed Price − Discount
• Listed Price = Selling Price + Discount

If a discount is expressed as a percentage (rate) in that case, the discount formula is:

• Discount = Listed Price × Discount Rate
• Rate of Discount = Discount% = (Discount/Listed Price) ×100
• Selling Price = Listed Price [(100−discount%)/100]
• Listed Price = (Selling Price × 100)/(100−discount%)

Calculating discounts is one of the most useful math skills that is required to balance our lifestyle financially. You can apply it at sales stores, restaurants, etc. These days online e-commercial markets usually prefer to offer a certain discount percentage to promote their sites and products. The general way of calculating discounts is to multiply the original marked price by the decimal form of the discount percentage. To calculate the net selling price of an item we need to calculate the difference between the original price and the discount. Follow the steps given below for calculating discounts:

• Step 1: Identify the values of the list price and the final selling price of an item.
• Step 2: Find the value of the discount amount by subtracting the selling price from the list price.
• Step 3: If you wish to calculate discount percentage, find the ratio of the discount amount and the list price, and then multiply it by 100.

For example, if the list price of a shirt is $25 and its selling price is $22, then we can calculate its discount amount by subtracting the selling price from the list price. i.e. $25 - $22 = $3. Now, to calculate the discount percentage on the shirt, we need to find the ratio of the discount amount and the list price, which is, $3/$25. Multiply it by 100. This implies, 3/25 × 100% = 12%. Therefore, there is a discount of 12% on the shirt.

Let us consider one more example to understand the procedure behind calculating discounts and sales prices.

For example: Think of a pair of shoes you wish to buy. Now you might want to calculate the sales price that is regularly $70 if the shoes are 15% off.

Let us follow the given steps to calculate the discount and sales price.

• Convert the percentage discount to a decimal. You need to convert 15% to a decimal that is 0.15.
• Multiply the price of the original pair of shoes by the decimal. This gives, $70 × 0.15 = $10.5.
• Subtract the calculated discount from the original price. This step gives you, $70 - $10.5 = $59.5. So, the shoes are on sale for $59.5.

Discounts can be written in amount as well as in percentage. When a price of an article is reduced and sold at an amount less than its list price, it means a discount has been offered. When this deduction in price is expressed in the form of a percentage (%), it is called a discount percentage or the discount rate. Below are the two main formulas used to calculate the discount percentage depending upon the given parameters:

• Discount (%) = (List price - Selling Price)/ List Price × 100
• Discount (%) = (Discount/List Price) × 100

To calculate the discount percentage offered on an article, you must have the value of certain parameters like the listed price (marked price) and the selling price of the product you are purchasing. Let us observe the steps involved in the process of calculating discount percentages with the help of an illustration given below.

Example: If the list price of a book is $150, and a $50 discount is offered on the book, then the discount percentage is calculated as follows.

Formula of Calculating Discount Percentage (%) = (Discount/List Price) × 100

Given parameters: Listed price = $150; discount = $50
Discount (%) = (50/150) × 100
= 100/3
= 33.33%

There is another form in which discount percentages are used in real life. Sometimes, the list price is given and the discount percentage is given, and we have to calculate the final selling price of the product. At that time, we can use the above formulas for calculating discounts to come to an answer. Let us understand calculating discounts with the help of a practical illustration.

Example: If the MRP of a product is $270, and there is a 15% discount on it, calculate the price at which the customer buys the product.

15% discount on the MRP = (15/100) × 270

Discount ($) = 4050/100 = $40.5

Therefore, Selling Price = MRP - Discount ($) = $270 − $40.5.

Therefore, after the discount, the customer can buy the product for $229.5.

☛ Related Topics

Listed below are a few interesting topics related to calculating discounts.

• Money
• Profit and Loss
• Present Discounted Value Formula
• Discount Calculator

What are the Different Ways of Calculating Discounts?

There are various methods using which we can easily calculate discounts. The two of the quickest ways are;

• By calculating the difference between marked price and selling price.
• By calculating discount % using the formula [(Discount/List Price) × 100].

What are the Formulas for Calculating Discounts?

For calculating discounts, we can use the formulas provided if the value of the parameters like listed price, selling price, discount rate, etc are known. Few formulas which we generally use while calculating discounts are listed below:

• Discount = Listed Price - Selling Price
• Discount = Listed Price × Discount Rate
• Rate of Discount = Discount% = (Discount/Listed Price) × 100

How do you Calculate a Discount?

Discounts can be calculated easily if we know the marked price and the selling price. Calculating discounts is nothing but the process of calculating the difference between marked price and selling price.

What is the Formula Used for Calculating Discounts Rate?

The formula used to calculate the rate of discount is (discount ÷ list price) × 100. In the formula, the discount is the difference between the marked price and the selling price. Another formula that can be used for calculating discount percentage is [(List price - Selling price)/List price] × 100.

What Process is Used While Calculating Discounts?

The process involved in calculating discount is described in the following steps:

Let us assume if the discount percentage is given as x% then,

• Step 1: Convert the percentage discount (x%) to a decimal.
• Step 2: Multiply the original price by the obtained decimal value.
• Step 3: Subtract the calculated discount from the original marked price to find the selling price of the item.

What are the Important Parameters Used for Calculating Discounts?

When we calculate discounts we required certain parameters. Those parameters are listed below:

• Listed Price or Marked Price
• Selling Price
• Rate of Discount

With the above-listed parameters, there is an individual formula associated, with the help of which we can calculate the discounts by substituting the respective values.

How do I Calculate Discount Percentage?

The discount percentage is the percentage of the listed price that can be deducted from the marked price to find the net selling price of the item. To calculate the discount percentage, the following formula can be used:

Discount % = Discount/List price × 100