Discount Calculator

1. What is a discount
2. How to calculate discounted price and savings
• Percentage discount calculation
• Final price with fixed amount discount
• Complex discounts
3. Discount types
4. Different kinds of discounts
5. Example discount calculations
6. Brief history of price discounts

    What is a discount

A discount is a reduction of the basic price of a good or a service. It can occur on any stage in the process of production or sale - suppliers can put a commercial discount on material prices, or retailers can put a bright red tag that says 15% OFF! on a piece of clothing.

Discounts are often made to prompt sales of outdated stock, reward customers, attract attention or increase profits in the short term. Oftentimes, we as customers fall into the trap of impulse buying tempted by a discount percent. However, more often than not we lose money, rather than save when we indulge in shopping by buying unnecessary goods prompted by the promise of a lower price.

    How to calculate discounted price and savings

Have you ever wondered how much a discount is actually worth? Maybe you have a few deals in mind, or have a percent off coupon in hand and want to know exactly what that discount percent equals in dollars. The easiest way to learn the answer is to use this discount calculator, but if you want to do the calculation by hand, use the formula:

Percentage discount calculation

The formula for calculating the final price and savings after a percent discount is as follows:

    Discounted price = Original price - (Original price x Discount(%) / 100).

Where Original price x Discount(%) / 100 equals the dollar amount savings. A percentage discount can be converted to a discount rate by dividing it by one hundred, e.g. 10% discount means the discount rate is 10 / 100 = 0.1. This straightforward formula is behind the inner-workings of our software.

The savings on a $100 product with a 10% discount are $100 x 10% / 100 = $100 x 0.1 = $10, whereas the savings on a 20% discount of the same $100 product would be $100 x 20% / 100 = $100 x 0.2 = $20.

Final price with fixed amount discount

When the value of the price decrease is in a fixed amount of dollars (our pounds, or euro...), the calculation is that of simple subtraction of the discount amount from the original price:

    Discounted price = Original price - Discount

This is the simplest type of discounting and applies to fixed sum coupons where discount and savings are one and the same. For example, on a $200 product with a discount of $20 the discounted price is simply $200 - $20 = $180.

Complex discounts

Calculations of the final price, savings, and discount percentage for offers such as "2 for 1", "3 for 2", or percentage off a second or third product or service purchased are all variants of the above two calculations. In these cases it is useful to also know the percentage by which the price was discounted and so our tool functions also as a discount percentage calculator.

    Discount types

Our discount calculator supports various types of discounts you can encounter:

• Percentage discount - a.k.a. percent off discount. These are very typical and come in the form of coupons, promo offers, etc.
• Fixed discount - a fixed dollar/pound/euro amount is discounted from the price, regardless of what it happens to be.
• Percent off a second product - a percentage discount is applied to your smallest value product or service beyond your first one.
• Percent off a third product - a percentage discount is applied to your smallest value product or service beyond your second one.
• 2 for 1 offer - you get two products for the price of the one with the highest price. Your second product is essentially free.
• 3 for 2 offer - you get three products for the price of the two with the highest prices. Your third product is a bonus.

It should be noted that more complex discount offers such as 2 for 1, 3 for 2, and percent off a second or third product only make sense if you had intended to purchase these additional products anyways. Sometimes one may be "tricked" into purchasing something just because it is "free" or heavily discounted which, in the end, is not a net benefit.

    Different kinds of discounts

There are different kinds of discount offers and promotions that you may come across that may invoke the need for a discount calculator.

Some are seasonal - often when seasons change big clothing stores announce 50+ % discounts. Major shoe brands like Adidas, Nike, Asics, Skechers, Fila, and Bata have established outlets for such inventory where you can get a bargain on your new shoes. The same goes for clothing companies such as Gucci, Louis Vuitton, Hermes, Prada, Chanel, Ralph Lauren, and Versace who often offer clothes on sale.

Specific social groups are given price reductions based on their characteristics - these include students, military officers, the elderly, and disabled people. Individuals identified as in need of supplementing their income may be offered coupons. Usually, these people have a specific document to testify to them being of a certain status. However, documents allowing a discount are not exclusive to those cases - coupons also are a form of discount ^[1]. Coupon or otherwise, this calculator can help you find out the sale price after discount.

Importantly, most companies offer special discounts to their employees, too (employee discounts). ^[1] Using these is a great option to ease the stress on your budget.

Certain dates of the calendar year like Black Friday and Cyber Monday have (rightfully or not) become synonymous with "huge discounts". Black Friday is when you can expect significant savings on purchases from brick-and-mortar stores, while Cyber Monday is when Amazon and other online retailers make generous discounts on their regular prices. Not surprisingly, our calculator is used most around these dates each year.

Finally, discounts may be related to a specific type of payment - many retailers prefer to be paid in cash, rather than with a bank card (credit or debit) in order to avoid transaction fees and receive the money immediately. ^[1] However, this discount practice is banned from certain contracts and contradicts the legal policy of multiple payment providers, so many merchants are forced to list the same price regardless of the payment method.

    Example discount calculations

Let’s look into a few situations where you may come across a discount (and might be in need of a percentage discount calculator).

• Say you walk into a store, and see a watch worth $300 being sold with a 15% discount. You now want to know what the new price of the watch is.

Discounted price = 300 - 300 x 15% = 300 - 300 x 0.15 = 300 - 45 = $255.

Therefore, the discount is $45, and the new sales price to pay is $255.

• Cinemas often offer discounts on Halloween. This year, you see an ad for a 50% discount on the second horror movie you buy a ticket for. Movie tickets in this cinema cost $10, but you are a student and use a percentage discount of 20%. If you decide to see two horror flicks on Halloween, your discount for the first one will be 20%, as you can only use your student’s discount.

            Discounted price = 10 - 10 x 20% = 10 - 2 = $8.

However, you can buy a ticket for the second movie with a 70% discount:

            Discounted price = 10 - 10 x 70% = 10 - 7 = $3.

So, seeing both films will cost you only $11 if you take advantage of the discounts. While it's not rocket science, the above percent decrease math can easily be outsourced to our easy-to-use discount calculator.

    Brief history of price discounts

Interestingly, discounts are a fairly recent phenomena. Percent discount calculators like this one would not be needed throughout most of human history as even the invention of money is itself only several thousand years old. Prior to that, trade deals were made in kind - a bushel of apples for a stack of hay, etc. Haggling over prices was how you got a good "discount" in the olden days. This custom is still present and even mandatory in many parts of the globe.

Without a fixed price, however, a price decrease doesn't really make sense. Many readers may be fascinated to discover this, but fixed prices and the practice of openly displaying the price tag of a good or service is a fairly recent Western development. Price labels were introduced first by the Quakers (religious group, part of Christianity) who, among other things, believed that the fixed pricing system would promote honesty and eliminate the greed that was pervasive in their communities ^[2]. It later gained wider adoption until it finally became law in most developed countries (consumer laws regarding discounts to follow).

It was partly the desire to be transparent and fair in their dealings, but it was also the industrialization of manufacturing that helped nudge this process. It wasn't until that moment that a discount on the price actually got its meaning, and so the need to calcualte discounts arose.