Discounts

In math, a discount is a reduction applied to the original price. Discount is usually expressed as a percentage of the original price. It helps in determining the final selling price of the product after the original amount is reduced. 

To calculate the discount we use the formula:

Discount  = List Price - Selling price

We use this discount formula when we know the original price and the price after the discount (Selling Price).

Selling price is the final amount of the product that is being sold after a discount has been applied to the item by the manufacturer or the seller. Some other key terms that most stores would use to describe discounts are “Off”, “Reduction”. 

For centuries, discounts have played a very vital role in making trades easier and growing businessess. In the past, merchants got discounts by trading goods or negotiating to lower prices and ensuring a good deal. Around the 1st century AD, merchants in Mesopotamia and Egypt based their prices on customer loyalty or the amount of items purchased. This made discounts exclusive to only a few customers. In the 15th century traders and merchants introduced discount pricing to attract more customers, marking this as the first time discounts were officially used. 

As years passed by, discounts started to get more popular and structured. Department stores began to offer clearance sales and seasonal discounts. Coupons started to get more popular and in 1887 Coca-Cola issued the first discount coupon as a form of advertising. In more recent years, discounts have become extremely popular and stores like Amazon offer discounts almost on a regular basis. Today, they play a crucial role in marketing, advertising, and attracting customers.

Discounts have several properties that show how they work in math and in businesses.

• The original price will always get reduced. Regardless of the discount percentage, the selling price will always be less than the list price.

• When multiple discounts are given, they are applied one after the other. They are not added together. So, if a product has a 20% discount first and then another 10% discount. The second discount is applied to the new reduced price and not the list price.

• Discounts can be a fixed amount or a percentage of the original price.

Discounts are usually offered when purchasing an item from a seller or manufacturers. There are three types of discounts:

Trade Discounts

This discount is usually offered by the distributor to the seller, not the end customer. Distributors usually have items in huge quantities and offers the item to the retailer for a reduced price.

Quantity Discounts

If a customer buys products in huge quantities from the seller, then quantity discounts would be offered to the customer. This is usually offered to attract customers to buy large quantities of an item.

Promotional Discounts

Most stores or manufacturers offer promotional discounts when a new product is in stock or when there is a clearance sale. Some sellers also promote a “buy one get one free” offer.

There are a few formulas we use to calculate discounts:

• Discount = List Price - Selling Price
   
• Discount % = (Discount / List Price) × 100
   
• Discount = (Discount% / 100) × List price
   
• Selling Price = List Price - Discount

Discounts can be important, especially for businesses, stores, and distributors. It encourages more sales and attracts more customers. It also benefits customers who want to buy items without it affecting their overall budget. Discounts can also be used to sell old stock that is either outdated or overstocked, this would benefit the sellers and distributors getting rid of items without much of a loss.

E-commerce platforms benefit from discounts as these platforms are used by people who stay in remote places and cannot access the products they want. So sellers have their online stores where they offer discounts allowing for more customers on a global scale.

Understanding the concept of discounts can be quite easy. But it can get quite confusing so here are a few easier approaches to make it much easier. Here are some tips and tricks:

• Memorize the basic discount formula: Students must memorize the basic discount formulas. Practice with real-life problems and different values to get comfortable with the formulas.

• Learn to quickly calculate percentages: Try to learn ways to calculate percentages of a number. For example, to find 10% of a number we need to move the decimal point one place to the left. So, 10% of 500 is 50.

• Practice in the real world: When you go shopping the next time, you can check the discount tags and calculate the final price yourself. You could even compare different discounts and find out what would be a better deal.

Discounts are applied in all kinds of shops, groceries, or online stores. Here are a few other real-world applications where we apply discounts

• Many companies such as Amazon and Apple Music offer discounts that are specifically for students. These are discounts targeted only towards students.

• Many Fast food restaurants and cafés offer seasonal discounts to gather more customers and promote their seasonal items.

• Gyms offer discounts on memberships for customers based on the gym’s packages.