Calculating Discounts

A discount is a decrease in the marked price of goods or services, as determined by the price shopkeepers offer customers. The marked price (listed price) is the price shopkeepers set for customers and should be equal to or less than the MRP.

The manufacturer sets the maximum retail price (MRP) of a product. The discount is often expressed as a percentage, representing a fraction of 100. Discount offers are common because they are a technique to boost sales. We use terms like 'reduction' or 'off' to indicate discounts. These concepts are applicable when calculating discounts, solving discount worksheets, practicing calculating prices with discounts, learning about calculating sales discounts in accounting, or completing a sales tax and discount worksheet. Understanding the formula for calculating discounts helps make all these activities easier. For example, if a toy has a marked price of ₹500 and the shopkeeper gives a 20% discount, the discount amount will be 20% of 500 = 100. So, the toy will cost ₹400 after the discount.

We can calculate the amount you can save from a discount using the different cases mentioned below:

• If the marked price and selling price are provided, we use the formula:
  
  
  \(\ \text{Discount} = \text{Marked Price} - \text{Selling Price} \ \)

• To calculate the discount percentage:
  
  \(\ \text{Discount (%)} = \left( \frac{\text{Discount}}{\text{Marked Price}} \right) \times 100 \ \)

When the discount percentage is known, we use the following step-by-step calculation:
 

• To calculate the selling price, we first divide the discount percentage by 100 to convert it into a decimal.
   
• We multiply the marked price by the decimal to obtain the discount.
   
• As a final step, we find the difference between marked price and discount to obtain the selling price.

For example: A school bag has a marked price of $1500, and the shopkeeper gives a 15% discount. Find the price the customer will pay after the discount.

Convert the discount percentage into a decimal 
\(15/100 = 0.15\)
 

Calculate the discount amount 
Discount amount =\( 0.15 × 1500 = $225\)

Calculate the selling price
Selling Price = Marked Price – Discount
Selling Price = \(1500 – 225 = $1275\)

To find the discount, follow these simple steps:

Step 1: Identify the difference between the list price of an item and the price at which it is finally sold.

Step 2: Subtract the selling price from the list price to get the discount amount.
These steps are often used when calculating discounts, completing discount worksheets, or calculating prices using discounts.

These steps are often used when calculating discounts, completing discount worksheets, or calculating prices using discounts.

Discount formula
\(\ \text{Discount} = \text{List Price} - \text{Selling Price} \ \)

Calculating Discount Percentage
A discount can be shown as a fixed amount or as a percentage. When an item is sold for less than its original list price, the difference is called the discount. When this reduction is written as a percentage, it becomes the discount percentage or discount rate. This calculation is commonly used to calculate sales discounts, for accounting, to calculate sales tax, in discount worksheets, and to learn the formula for calculating discounts.

\(\ \text{Discount (%)} = \frac{\text{List Price} - \text{Selling Price}}{\text{List Price}} \times 100 \ \)

\(\ \text{Discount %} = \left( \frac{\text{Discount}}{\text{List Price}} \right) \times 100 \ \)

Discounts are often offered by the distributors to customers to increase their sales. There are different types such as trade discounts, quantity discounts, and promotional discounts. 


Trade discount: This type of discount is offered by the distributor to the retailer rather than the customer. It is given to retailers to help them sell the distributor’s products.

Promotional discount: These discounts are offered when the distributor needs to clear their stock or promote their new product. For example: “Buy 1, get 2 free”.

Quantity discount: These discounts are given to attract more customers when they purchase products in large quantities.

Discount rate: If the lowered price is given as a percentage, it is known as the discount percentage or discount rate. We can calculate the discount rate using the formula:

\(Discount \ \% = \frac {(list\ price - selling\ price)} {list\ price} × 100\) [OR]

\(Discount\ (\%) = (\frac {discount}{list \ price}) × 100\)
 

A discount makes the price lower when you buy something, while a rebate gives you some money back after you’ve already purchased it.

Calculating the percentage difference helps students save money without overspending. We will now look into a few tips and tricks:

• Use the “multiplier” shortcut. Instead of finding the discount and then subtracting, multiply directly by what remains after the discount.

• Break down difficult percentages into small ones. If the percentage is tricky (like 35%), break it down to.

• Doubling discounts is not the same as adding them. Two successive discounts don’t simply add up. For example, 20% and then 10% off is not 30% total.

• Use real-life problems for practice. While shopping, challenge yourself. Estimate the final price before seeing the bill. Compare your mental result with the actual discount. This builds confidence and number fluency.
  
   
• Teachers can help children use the “multiplier” shortcut. Instead of first finding the discount and then subtracting, students can multiply directly by what remains after the discount.
  
   
• Children can break down difficult percentages into smaller ones. For example, if 35% feels tricky, they can split it into easier parts like 30% + 5%.
  
   
• Parents can remind children that doubling discounts is not the same as adding them. Two successive discounts don’t simply add up, for example, a 20% discount followed by a 10% discount is not a total of 30%.

Calculating discounts has numerous applications in real-world situations. Let’s take a look at them:
 

1. Children can apply discounts to save money when buying clothes, books, or chocolates. It allows them to save money and buy more products by spending less capital. 
    
2. Companies make use of discounts as a technique to increase their sales by attracting customers (like festival season sales). Discounts attract new customers, and they can buy more items than they plan to purchase.
    
3. Students can avail of discounts on public transportation, making travel more affordable. By calculating discounts, they can travel by paying less fare than the other passengers. 
    
4. Discounts are provided by different sectors like healthcare for senior citizens and poor families. These price reductions help people to access essential services at low cost. 
    
5. Events and parties often provide early bird discounts to attract more people to attend.