Discount Formula

Discount Amount Formula

We all are eager about availing discounts but we barely know how we get these discounts. There is a proper way to calculate discount and that we do by using a discount formula. The discount rate formula can either be extracted by subtracting the selling price of the product from its marked price or by multiplying the discount rate offered and the marked price of the product. In terms of Mathematics, the formula for discount is represented as below,

Discount = Marked Price – Selling Price

OR

Discount Percentage Formula = Marked Price × Discount Rate

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Other basis Discount formula are as below:-

Discount = List Price - Selling Price

Therefore

Selling Price = List Price - Discount

List Price = Selling Price + Discount


Discount Percentage Formula

Rate of Discount = Discount % = \[\frac{Discount}{List Price}\] × 100

Selling Price = List Price(100 - discount%/100)

List Price = Selling Price (100/100 - discount%)


Definition of Discount with Simple Discount Rate Example

The term “discount” refers to the pricing system in which the price of a commodity (goods or services) is lower than its marked price aka listed price. It is simply to say, 'discount' is a percentage of the listed price. A discount is a kind of price deduction in products that is noticed in consumer transactions, where the buyers have proposed a percentage of rebates on various products in order to boost sales. This rebate offered by the seller to buyer is known as a discount.

The discount is always calculated on the listed price while considering the selling price.

  1. 'Listed price' is the usual price of a commodity not inclusive of any discount.

  2. 'Selling price' is the amount we actually pay to acquire the commodity when we buy.


Successive Discounts

If two or more discounts are offered one after the other then such discounts are called the successive discounts or we also call them discounts in series. That said; assume a discount of 15 % is provided on an item. Then on the reduced price of the product, another discount of 12% is given. In such a case, we say that successive discounts of 15% and 12% are given.

For example, find a single discount equivalent to two successive discounts of 15% and 12% on an article.

Solution:

Let the listed price of an article be Rs 100.

Then, first discount on it = 15%

Price after the 1st discount = Rs (100 - 15) = Rs.85

2nd discount on the updated price i.e. = 12% of Rs.85

= Rs {85 × (102/100)} = Rs 10.2

Thus, Price after 2nd discount = Rs (85 – 10.2) = Rs. 74.8

Net selling price = 74.8

Single discount equivalent to offered successive discounts = (100 – 74.80) % = 25.2%.


There is a thing called Fake Discounts

Yes, there also exist Fake discounts, which we also sometimes refer to as fictitious pricing. It is actually a deceitful practice that some retailers involve in, wherein the presumed 'pre-sale price' of an article is immoderately increased, or the 'post-sale price' of an article is actually its market price. This is done basically to trick the consumers into thinking they are getting a discount, making them more likely to buy an article.


Solved Examples

Example1

In an apparel store, a sweatshirt that sells for Rs1500 is marked "10% off." Find out the rate of discount? What is the sale price of the sweatshirt?

Solution1

Assessment: Considering that the apparel store often sells goods for a discounted price. Essentially, a seller will discount a product by a percent of the original price. In this problem, a product that originally costs Rs1500 is being discounted by 10%. So "10% off" signifies the rate of discount. To solve this problem, we require following a procedure.

Procedure

The rate is generally given as a percent.

To calculate the discount, just multiply the rate by the original price.

To compute the sale price, deduct the discount from the original price.

Now that we have a procedure in place, we can simply solve the above problem

Solution: Given that the rate is 10%.

The discount is: 0.10 x Rs1500 = Rs150

Now, the sale price is reckoned as follows:

Original price = Rs1500

Discount - 150

Thus the sale price = Rs1350

Example2

A dealer purchased a microwave oven for Rs10000. He offered a discount of 20% on its listed price and still gains 10%. Find the listed price of the microwave oven.

Solution2

Cost price of the oven = Rs10000, Profit% = 10%.

Thus, selling price = [{100 + profit %} /100 × CP]

                 = Rs [{100 + 10)/100} × 10000]

                 = Rs [(110/100) × 10000]

                   = Rs 11000.

Now, Let the listed price be Rs x.

Then, the discount = 20% of Rs. x

           = Rs {x × (20/100)}

           = Rs 1x/5

Therefore, SP = (Listed Price) - (discount)

           = Rs (x - 1x/5)

           = Rs 4x/5.

But, the SP = Rs 11000

Therefore, 4x/5 = 11000

⇒ x = (11000 × 5/4)

⇒ x = 13750

Hence, the marked price of the microwave oven is Rs 13750

FAQ (Frequently Asked Questions)

Q1. Do we have just one type of Discount?

Ans. There are typically three types of discounts which are as follows:-

  1. Trade Discounts – This is a type of discount that is offered by a supplier to distributors. This discount enables distributors to differ their own prices, so that all items can be sold.

  2. Quantity Discounts - This is a type of discount that the consumer receives a discount depending on the number of units purchased. All thanks to economies of scale!

  3. Promotional Discounts - This is a type of discount which is quite beneficial for the sales promotion. This technique of granting discounts has emerged to be most preferable amongst shopkeepers. You've definitely seen one in the form of 50% + 20% off sale, or a buy 2 & get 1 free offer.

Q2. What is meant by Percentage Discount?

Ans. Percentage discount is a kind of discount that is offered on a product or service in the form of an amount per hundred. For such kind of discount amount formula, we suppose the original price as 100 and deduct the discount percentage from it. For example, a percentage discount of 10% would indicate that a commodity that originally cost Rs 100 would now cost Rs 90. This is also quite common practice with promotional and seasonal sales, as a way of influencing consumers to purchase an item at a reduced cost and ultimately boost sales.