# Discount Calculator

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## The purpose of the percent discount calculator.

Discounts are an effective method of attracting new customers or encouraging them to buy more. A well-thought-out sale policy could boost your sales and fuel the growth of your company.

• Calculate the percent off sale price

• Calculate the amount off sale price

• Work out the discount rate from the list price and the sale price

## Discount formula

The equation for calculating the discount percentage is very simple.

D = (LP - SP) / LP * 100%

Where:

• D - discount percentage

• LP - list price

• SP - sale price

We can also derive the formula for calculating the sale price:

SP = LP - D/100% * LP

And work out the original price before the discount.

LP = SP / (1 - D/100%)

## How to use our discount price calculator?

Our online tool is very simple to use. You only need to fill in and submit the form above. In order to avoid any misunderstanding read the definitions of the fields carefully.

• List price - The original price of a product or service before the cash discount.

• Sale price  - The amount of money the customer has to pay after applying the discount (final price).

## Examples

Below you can find some real-life scenarios of applying these equations in practice.

### How to calculate a discount?

Finding the discount rate is a pretty straightforward task. You should keep in mind not to mix gross and net values.

This is a very common mistake salesmen make during purchase price negotiations. The discount is calculated from the suggested retail price (SRP) which includes sales tax, while resulting prices are expressed in net amounts.

Example
The retail price of a bike is \$299,99. The manufacturer offers you a 30% discount, but your ERP system asks you for a net price.

Step 1.

In order to calculate the net price after the trade discount, you need to convert the gross price to a net price. Let’s assume your sales tax rate is 20%.

Net_srp_price = SRP / (1 + tax/100%) = \$299.99 / (1 + 20%/100%) = \$249.99

Tip. You can use our sales tax calculator or reverse sales tax to find price before and after sales tax.

Step 2.
The last thing you need to do is to enter the net selling price into our money discount calculator or use the formula below:

D = (LP - SP) / LP * 100%

Where:

• LP - net suggested retail price

• SP - net purchase price

### How to calculate the sale price?

As in the previous case, such a calculation should not be difficult, the only thing necessary to keep in mind is to bring all the values either to the net or the gross amount.

Let’s see an example.

A retail store offers 40% off on every product in the inventory.  What is the sale price of a camera worth \$184.99 after a 40% cash discount.

SP = LP - D/100% * LP = \$184.99 -40%/100% * \$184.99

### How do I find the previous price?

Finding the original price is very handy. In order to achieve that, you need to reverse the discount rate formula and stick to the net or gross values.

Example
The promotional price of glasses after a shopping discount equals \$300. The reduction was -60%. What is the regular price?

1. The formula for the price before the discount is as follows:

LP = SP / (1 - D/100%)

1. Since all the amounts are gross values we can substitute them into the formula.

LP = SP / (1 - D/100%) = \$300 / (1 - 60%/100%) = \$300 / ( 1 - 0.6) = \$300 / 0.4 = \$750

The resulting original price was \$750, which indeed seems to be an attractive discount.

## What are the types of discounts?

### Promo price

It is the simplest and most popular form of a markdown. New prices can decrease by a percentage or a fixed amount of money. So we can distinguish two subtypes of this method.

• Percent off sale

• Fixed amount off sale

Both can be worked out using our discount finder form.

### Quantity discounts

Another very common sale policy is quantity discount. The idea is simple, the sale price applies to all orders that exceed a specific quantity of goods, i.e. for over 100 pieces.

### Bundles

One more efficient sale method is bundle sale. According to this rule an attractive price is offered for orders that contain a specific set of products.

This method has an extra advantage apart from boosting sales. It is an effective way of selling out poorly performing products you have in stock. For example you can bulk a bestseller with not performing accessories and sell them in sets.

These are most commonly used in the wholesale industry. The suppliers offer price reduction for distributors.

Suppliers tend to reward the most effective distributors by applying a discount policy dependent on the value of sales. The higher the sales, the higher the discount.

### Loyalty Discount

This is a popular practice of retaining customers. Offering a discount for subsequent orders is a proven way of encouraging customers to buy again.

Reduce the price of your product or service for returning customers and you can be sure that their recurring orders will generate savings in customer acquisition.

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