How to use the discount calculator
- 1Choose whether you know the discount percentage or the price after the discount.
- 2Enter the original price before any discount.
- 3Enter the discount percentage, or the sale price, to get the other.
- 4If you are the seller, enter your cost per unit to see the margin and profit left after the discount.
- 5Check how many more units you would need to sell to earn the same gross profit as at full price.
How to work out a discount
Multiply the original price by the discount as a decimal to get the saving, then subtract it. 25% off $80 is a $20 saving, so the sale price is $60.
A quicker way is to multiply by what is left: 25% off means paying 75%, and $80 × 0.75 = $60.
Sale price = Original price × (1 − Discount % ÷ 100)
Finding the discount between two prices
If a price dropped from $80 to $60, subtract the new price from the old one and divide by the old price. $20 ÷ $80 is a 25% discount.
Discount % = (Original price − Sale price) ÷ Original price × 100
What a discount does to your margin
For a seller, the whole discount comes out of profit, because the cost of the item does not change. A 25% discount on an item with a 55% margin does not leave a 30% margin; it cuts profit per unit from $44 to $24 on an $80 item that costs $36.
That is why discounts need extra volume to pay off. To earn the same gross profit, divide the full-price profit by the discounted profit. Here $44 ÷ $24 is 1.83, so you need to sell 83% more units just to stand still.
Extra units needed = (Profit at full price ÷ Profit after discount − 1) × 100
Discounts and sales tax or VAT
In the US and Canada, sales tax is usually added at checkout on the discounted price, so the discount is worked out before tax. In the UK and EU, shelf prices normally include VAT, and a percentage off the shelf price reduces the VAT by the same share. Either way, work out your margin on prices without tax. Rules on coupons and tax differ by place, so check your local rules.
Worked example
A clothing shop sells a jacket for $80 that costs it $36, and plans a 25% off weekend sale.
| Original price | $80.00 |
| Discount | 25% |
| Sale price | $60.00 |
| Customer saves | $20.00 |
| Margin before discount | 55% |
| Margin after discount | 40% |
| Profit per jacket | $44.00 → $24.00 |
| Extra sales needed for the same profit | 83.3% |
Customers save $20 and pay $60. The shop still makes $24 per jacket at a 40% margin, but needs to sell 83% more jackets than usual to earn the same total profit.