Aseller offers his products ata discounted rate at times. This can be to attract new customers or to introduce a new product to the market. Thisreduced price than the regular is known as thediscount percentage or rate. Thisrate is calculated using a discount formula.
Learn how this formula works with the help of illustrations.
What Is the Formula of Discount Percentage?
There aretwo formulas for calculating discount percentages:
- Discount (%) = (Discount/List Price) × 100
- Discount = List Price - Selling Price
The first formula is the one to calculate the discount percentage.
There are a few other ways to calculate the discount percentage when the percentage is given:
- Rate of Discount = Discount% = (Discount/Listed Price) ×100
- Listed Price = (Selling Price × 100)/ (100−discount %)
- Discount = Listed Price × Discount Rate
- Selling Price = Listed Price [(100−discount%)/100]
Discount Percentage Formula with Examples
Now that you know the formulas to calculate the discount percentage, let's understand this with the help of an illustration.
Let’stake the first formula to start with:
Suppose you are going to purchase a product worth Rs.4,500. It has a 40% discount applied to it. So what will be the price at which you will get the product?
Putting these into the first formula you get,
Discount percentage, if turned into decimal will be = (40/100) = 0.4
Hence, the amount of discount applicable on it will be = 4500 X 0.4 = 1800
Therefore, the selling price will be (listing price – discount) = (4500 - 1800) = 2700.
Hence, you can get the product at Rs.2700.
Now, if youreverse the scenario where youhave to figure out the rate of discount on a product, you have to use the following formula:
Rate of Discount = Discount% = (Discount/Listed Price) ×100
Let’s see how it works with the help of an example:
Suppose you are purchasing a product with a listing price of Rs.500, and you are getting an Rs.200 discount on it. Hence, you are getting the product at Rs.300. So, how much discount is being applied to it?
Rate of Discount = Discount% = (Discount/Listed Price) ×100 = (200/500) X 100 = 40
Hence, you are getting the product at a 40% discount on the listed price.
Successive Discount Formula
Successive discount works in asimilar way to compound interest. It means a discount on discount.
Suppose you are buying a book worth Rs.300 with a 10% discount. Now, the seller has offered another 20% discount on the new price. So, what will be the final price?
You can simply find it by repeating the formula of finding the discount percentage. Alternatively, you can use thesuccessive discount formula:
Successive discount = X + Y – (XY)/100
Here, X denotes the first discount, and Y denotes the second discount.
Hence, considering the example stated above, we get.
Successive discount = 10 + 20 – (10X20)/100 = 28
Hence, you will get the book at a 28% discount.
Discount Formula in Profit and Loss
Sellers offer discounts on the listed price to promote products, manage competition, and increase sales. However, they don't do it at a loss.
Here is thediscount formula for profit and loss:
Discount= (Marked Price – Selling Price)
The idea is pretty simple. If a seller has bought a saree for Rs. 1000 and sold it for Rs. 1500, then he made a profit of Rs. 500. But if he has sold it for Rs. 800, then he made a loss of Rs. 200.
Conclusion
Knowing how to calculate discount percentages is a basic financial skill to acquire. It will help you manage your finances wisely and balance them. The discount formula is pretty simple and can be practised without the need for a calculator.
