A discount is a reduction in price of a product or service from its original price. Its used across retail, services, and other industries to increase sales, manage inventory, and attract customers.
The most common form of discount, reducing the price by a specific percentage of the original price.
Example: A $100 item with 20% discount → Sold for $80
Directly deducting a specific amount from the original price.
Example: A $100 item with $20 discount → Sold for $80
Offering one item free when another is purchased, effectively providing a 50% discount.
Example: "Buy one, get one free" promotion
Providing larger discounts based on purchase quantity.
Example: 10% off for 10+ items, 20% off for 50+ items
Percentage Discount Calculation
Discount Amount = Original Price × Discount Rate(%)
Discounted Price = Original Price - Discount Amount = Original Price × (1 - Discount Rate(%))
Discount Rate Calculation
Discount Rate(%) = (Discount Amount ÷ Original Price) × 100 = ((Original Price - Discounted Price) ÷ Original Price) × 100
Original Price Calculation (When knowing discounted price and discount rate)
Original Price = Discounted Price ÷ (1 - Discount Rate(%))
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Heavily discounting certain products to attract customers, then selling other products at regular prices
Example: Supermarkets discounting essential goods to increase foot traffic
Offering discounts when multiple products are purchased together
Example: "10% off when buying 3 items", "20% off for set products"
Providing special discounts to regular customers or membership holders
Example: "5% additional discount for members", "Special price for VIP customers"
Recommended Discount: 10-25%
Excessive discounts risk devaluing the brand
Recommended Discount: 15-40%
Adjust flexibly according to seasons and inventory
When applying multiple discounts sequentially, theyre not simply added but multiplied. For example, a 20% discount followed by an additional 10% discount results in a total 28% discount effect. Formula: 1 - (1-0.2) × (1-0.1) = 0.28 (28%)
As the discount rate increases, the margin rate decreases. For example, a product with a cost of $60 and selling price of $100 (40% margin) thats discounted by 20% will sell for $80, reducing the margin to 25%. Always consider margin when developing discount strategies.