Discount Percentage Formula: How to Calculate Discounts

Discounts are an effective way to attract customers and boost sales. It helps businesses to stand out in a competitive market and attract a wide range of customers. They come in different forms: percentage off, fixed amount off, buy-on-get-one-free, and free shipping. In this article, we will discuss the discount percentage formula and how it can be used to calculate discounts quickly and accurately.

Table of Contents

• What is a Discount?
• Discount Formula
• Types of Discount
• What is the Discount Percentage Formula?
• Calculating Original Price from Sales Price and Discount Percentage
• Understanding Discount Percentage Formula with Example
• Practice Problem on Discount Percentage Formula

What is Discount?

A discount is a reduction in the price of a product or service. It is a common promotional strategy used by businesses to attract customers and increase sales. Discounts can come in various forms, such as percentage off, fixed amount off, buy-one-get-one-free, or free shipping.

For example, a clothing store might offer a 20% discount on all items during a holiday sale. This means that if a customer buys a dress that originally costs $50, they will get a $10 discount and only have to pay $40.

Another example is a restaurant offering a buy-one-get-one-free deal on their menu items during happy hour. This means that if a customer orders a burger for $10, they will get another burger for free.

Discount Formula

The discount formula is used to calculate the discounted price of a product or service after a certain percentage or fixed amount is deducted from the original price. The formula for calculating the discounted price is as follows:

Discounted Price = Original Price - (Discount Percentage * Original Price) or 

Discounted Price = Original Price - Discount Amount

Let's have some examples to understand how this formula works. 

Example 1: Suppose a shirt originally costs $50 and is being sold at a discount of 20%. To calculate the discounted price of the shirt, we can use the discount formula as follows:

Discount Percentage = 20%

Discount Amount = 20% * $50 = $10

Discounted Price = $50 - $10 = $40

Therefore, the discounted price of the shirt is $40.

Example 2: A store offering a fixed discount of $15 on a product that originally costs $100. To calculate the discounted price, we can use the discount formula as follows:

Discount Amount = $15

Discounted Price = $100 - $15 = $85

Therefore, the discounted price of the product is $85.

Types of Discounts

There are several different types of discounts that businesses can offer to customers. Here are some of the most common types of discounts:

1. Percentage Discount: This type of discount is calculated as a percentage of the original price. For example, a store may offer a 20% discount on all products during a sale.
2. Fixed Amount Discount: This type of discount is a specific dollar amount off the original price. For example, a store may offer a $10 discount on a product that originally costs $50.
3. Buy One, Get One (BOGO) Discount: This type of discount allows customers to buy one product and get another product for free or at a discounted price. For example, a store may offer a BOGO deal on a pair of shoes, where customers can buy one pair and get the second pair at 50% off.
4. Volume Discount: This type of discount is offered to customers who purchase a large quantity of a product. For example, a store may offer a 10% discount to customers who buy 10 or more products.
5. Seasonal Discount: This type of discount is offered during specific seasons or holidays. For example, a store may offer a discount on winter clothing during the summer season.
6. Cash Discount: This type of discount is offered to customers who pay in cash instead of using a credit card or other payment method. For example, a store may offer a 5% cash discount to customers who pay in cash.
7. Referral Discount: This type of discount is offered to customers who refer new customers to a business. Both the referrer and the referred customer might receive a discount on their next purchase. For example, "Refer a friend, and both get $10 off your next purchase."

In the above formula (discount formula), we have used discount percentage. Now, the question is how to calculate the discount percentage formula.

What is the Discount Percentage Formula?

The discount percentage formula is used to calculate the percentage of the discount applied to the original price of a product or service. This formula helps understand how much discount has been applied to the original price. 

The formula for calculating the discount percentage is as follows:

Discount Percentage = (Discount Amount / Original Price) x 100%

Let's have some examples to see how this formula works. 

Example 1: Suppose a store is offering a discount of $20 on a shirt that originally cost $50. To calculate the discount percentage, we can use the discount percentage formula as follows:

Discount Amount = $20

Original Price = $50

Discount Percentage = ($20 / $50) x 100% = 40%

Therefore, the discount applied to the original price of the shirt is 40%.

Example 2: A store offering a discount of $50 on a product that originally costs $200. To calculate the discount percentage, we can use the discount percentage formula as follows:

Discount Amount = $50

Original Price = $200

Discount Percentage = ($50 / $200) x 100% = 25%

Therefore, the discount applied to the original price of the product is 25%.

Now, what if you have the sale price and discount percentage, then how do you calculate the original price?

How to Calculate the Original Price from Sales Price and Discount Percentage?

Let’s have an example to see how to calculate the original price from the sales price and discount percentage.

Suppose you bought a dress for $45 after a 10% discount, and you want to find out the original price.

Let P be the original price. The sale price is given by:

Sale Price = P - (P x Discount Rate)

=> 45 = P - (P * 10%) = P - (P * 0.10)

=> P = 50

So, the original amount of the dress was $50.

Now, let's give more examples to ace the Discount Percentage Formula.

Understanding Discount Percentage Formula with Example

1. A store offers a 25% discount on a product that originally costs $80. What is the discounted price of the product?

Solution: 

Discount Percentage = 25%

Original Price = $80

Discount Amount = 25% x $80 = $20

Discounted Price = $80 - $20 = $60

Therefore, the discounted price of the product is $60.

2. A customer gets a $15 discount on a product that originally costs $75. What is the discount percentage?

Solution: 

Discount Amount = $15

Original Price = $75

Discount Percentage = ($15 / $75) x 100% = 20%

Therefore, the discount percentage is 20%.

3. A store offers a 10% discount on a product that originally costs $120. If a customer has a coupon that gives an additional 5% off, what is the total discount percentage?

Solution: 

Discount Percentage = 10% + 5% = 15%

Original Price = $120

Discount Amount = 15% x $120 = $18

Discounted Price = $120 - $18 = $102

Therefore, the total discount percentage is 15%.

4. A store offers a 30% discount on a product that originally costs $50. If a customer uses a store credit of $10, what is the final price of the product?

Solution: 

Discount Percentage = 30%

Original Price = $50

Discount Amount = 30% x $50 = $15

Discounted Price = $50 - $15 = $35

Final Price = $35 - $10 = $25

Therefore, the final price of the product is $25.

5. A store offers a buy one, get one free (BOGO) deal on a product that originally costs $60. What is the discount percentage?

Solution: 

Discount Amount = $60

Original Price = $120 (for two products)

Discount Percentage = ($60 / $120) x 100% = 50%

Therefore, the discount percentage is 50%.

6. A store is offering a discount of 20% on a product that originally costs $100. If the store increases the discount to 25%, what is the new discounted price?

Solution: 

Discount Percentage = 25%

Original Price = $100

Discount Amount = 25% x $100 = $25

Discounted Price = $100 - $25 = $75

Therefore, the new discounted price is $75.

7. A store is offering a volume discount of 10% to customers who purchase 20 or more products. If a customer buys 25 products that cost $10 each, what is the total discount?

Solution: 

Discount Percentage = 10%

Original Price = $250 (25 products x $10 each)

Discount Amount = 10% x $250 = $25

Therefore, the total discount is $25.

8. A store is offering a seasonal discount of 15% on a product that originally costs $200. If a customer has a coupon that gives an additional 5% off, what is the total discount percentage?

Solution: 

Discount Percentage = 15% + 5% = 20%

Original Price = $200

Discount Amount = 20% x $200 = $40

Discounted Price = $200 - $40 = $160

Therefore, the total discount percentage is 20%.

9. A store is offering a fixed amount discount of $30 on a product that originally costs $150. What is the discount percentage?

Solution: 

Discount Amount = $30

Original Price = $150

Discount Percentage = ($30 / $150) x 100% = 20%

Therefore, the discount percentage is 20%.

10. A store is offering a cash discount of 5% to customers who pay in cash. If a customer buys a product that originally costs $500 and pays in cash, what is the discounted price?

Solution: 

Discount Percentage = 5%

Original Price = $500

Discount Amount = 5% x $500 = $25

Discounted Price = $500 - $25 = $475

Therefore, the discounted price is $475.

Practice Problem on Discount Percentage Formula

1. A store is offering a discount of 20% on all items. If a customer buys a shirt originally priced at $25, how much will they pay after the discount?
2. A company is offering a 10% discount on all orders over $100. If a customer's order totals $150, how much will they pay after the discount?
3. A store is offering a discount of 30% on all items. If a customer buys three items, originally priced at $10, $15, and $20, respectively, how much will they pay after the discount?
4. A car dealership is offering a discount of 15% on all cars. If a car is originally priced at $25,000, how much will a customer save with the discount?
5. A restaurant is offering a 25% discount on all meals during their grand opening week. If a meal is originally priced at $40, how much will a customer pay after the discount?