Discount Formula: How to Calculate Discounts Easily Everybody must have seen a board saying “Flat 50% Off” while shopping and thought about how that price is calculated by giving a discount. A discount simply means a reduction from the marked price, helping customers save money while boosting sales for sellers. In this article, you’ll easily learn how to calculate a discount using the discount formula explained step by step and other related formulas in regards to discount formula, which helps to calculate other variables with easy examples and also about successive discounts, and you will also need to keep certain things in mind while calculating a discount to avoid mistakes in real life or exams. What is discount? A discount is a decrease in the price of goods or services provided by shopkeepers from the marked price. The marked price (or list price) is the price of goods or services as indicated by the seller without any decrease, and the selling price is the price paid by the customer after the discount. Discounts are often given as a marketing strategy to increase sales or clear old stock.
Suggested reading on the Sales Promotion scheme and trade discount under GST
Discount calculation For calculating the amount of discount, we apply the following formulas,
Discount = Marked Price (MP) - Selling Price (SP)
(The values marked price and selling price are given)
Discount (%) = (Discount / Marked Price ) × 100
(This is to calculate the discount percentage. The values of the marked price and the selling price are given.
Suggested read on What is MRP under GST?
Steps of the calculation of the discount Let's understand the steps of the calculation of the discount with an example.
Example: Find the discount amount and discount % if the marked price of a trouser is ₹800 and sold at a price of ₹720.
Step 1: Note down the values provided carefully
Marked price = Rs 80 ,Selling Price = Rs ₹720
Step 2: With the values given in the example, find the discount amount
Discount =MP -SP = 800-720 =Rs 80
Step 3: Ready to calculate Discount %
Formula of Discount percentage(%) =(Discount) / MP) × 100
Put the value of the discount calculated in step 2 and the Marked Price
Discount %= (80/800)x100 =10%
By following the steps the result comes out that discount = ₹80, and the discount percentage = 10%
Other formulas related to discount There are a few more important formulas related to discount that help you find the Discount, Selling Price (SP), or Marked Price (MP) easily when other respective variables are given, with easy examples.
Formula to find the discount
When discount%, MP are given
Discount=Discount%/100x Marked Price
Example = Find the discount on an item whose Marked Price (MP) is ₹500 and Discount% is 25%.
Solution : Discount= 25/100x500 = Rs 125
Formula to Find Selling Price
When the Discount and Marked price are given,
Selling Price =Marked Price - Discount
When the values discount percentage and the marked price are given
Selling Price = Listed/Marked Price [(100−discount%)/100]
Example: Find the selling price of an item whose marked Price is ₹4500 and the discount % is 40%.
Solution = Selling Price = 4500 × [(100 − 40) / 100] where discount% value is 40 %
Result = Selling price =4500 × 60 / 100 = ₹2700
Formula to find the Marked price
When the values of the discount and the selling price are given
Marked price = Selling Price + Discount
When the values of the discount percentage and the selling price are given
Marked Price = (Selling Price × 100) / (100 − Discount %)
Example: Measure the marked /listed price of the product if it is sold at ₹2700 after applying a 40% discount on the product
Solution: Marked Price = (2700 × 100) / (100 − 40)
Result =Marked Price =270000 / 60 = ₹4500
Successive Discount Formula When the seller offers more than a single discount on the same item, it is equivalent to availing a discount on discount on the cost of the commodities.
Successive Discount Formula =X+Y−(XY)/100
Here,X = Initial discount percentage, Y = Subsequent discount percentage
Let us discuss with an example
Suppose Sita purchased a bracelet which was originally valued at ₹1,000. The shopkeeper gave a discount of 15% for the first time, then, due to a close family connection, the shopkeeper gave another 10% discount on the updated (reduced) price.
In this example successive discount will be calculated using the formula,
Solution using the formula to calculate the final discount.
x= 15% & y=10%
=15 + 10 - (15 X 10) /100
=25 - 1.5 = 23.5%
Selling Price =1000– (23.5 /100 X 1,000) = ₹765.
Common Things to Remember There are a few common things everybody should remember while computing a discount to avoid errors, which are as follows:
Remember the discount is done on the Marked Price (M.P.) and not on the Cost Price (C.P.).
While applying successive discounts, the second discount is always done on the reduced marked price, which has already been decreased by the initial discount
Always deduct the discount from the marked price in order to determine the selling price.
Conclusion Understanding the formula for discount makes one wiser in shopping, and for scholars to easily solve mathematical problems involving discounts. Whether it’s a single discount or successive discounts, the key is to know which figures to use and how to apply the formula correctly and avoid any errors or confusion. So next time you see a sale, you will know what the reduction in price will be and how much you are saving.
Suggested reading on Merchant discount rate charges
FAQs What are some of the various types of discounts? Promotional discount, trade discount, quantity discount, loyalty and seasonal discount are
Define the marked price used in the discount formula. It is the original price of the product prior to any discount .Other names are the list price or tag price.
An item which is originally valued at Rs 200, and there is a 15 % discount on it , what is selling price of an item ? Selling price =Marked price - discount. The discount value is 15/100 X200 =Rs30
Selling price of the item is Rs 200- Rs30 Rs 170, i.e SP=MP-Discount
What is the purpose of giving discounts? They are provided to attract customers by creating urgency to purchase from the reduced price or to clear the old stocks.
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