How to Find the Discount Price and Calculate Savings

Understanding how to calculate discounts is a valuable financial skill for consumers. A discount represents a reduction in the original price of a good or service, allowing shoppers to pay less than the standard cost. Mastering these calculations empowers individuals to make more informed purchasing decisions and effectively manage their personal finances by identifying genuine savings opportunities.

Calculating a Single Discount

Calculating the final price after a single percentage discount is straightforward. First, convert the discount percentage into a decimal by dividing it by 100. For example, a 20% discount becomes 0.20. Multiply this decimal by the original price to find the discount amount.

Subtract this discount amount from the original price to get the final discounted price. Alternatively, subtract the discount percentage from 100%, then convert this remaining percentage to a decimal. Multiplying this decimal by the original price directly provides the final discounted price. For instance, with a 20% discount, you would calculate 80% of the original price to find what you pay.

Applying Multiple Discounts

When an item has multiple discounts, such as “20% off, then an additional 10% off the sale price,” these reductions apply sequentially. This means the second discount is taken from the price remaining after the first discount has been applied, not from the original price. A common misconception is to add the percentages together, but this approach will result in an incorrect, lower final price. For example, combining 20% and 10% does not equate to a 30% total discount.

To illustrate, consider an item originally priced at $100. A 20% discount reduces the price to $80. If an additional 10% discount is then applied, it is calculated on the $80 sale price, not the original $100. This second 10% discount amounts to $8, bringing the final price down to $72. This sequential application ensures the correct final amount is paid.

Common Discount Scenarios

Beyond percentage-based reductions, other common discount formats require specific calculation methods to determine savings. A fixed dollar amount off, such as “$10 off your purchase of $50 or more,” is a direct subtraction from the subtotal. This offer provides a clear, predetermined savings amount rather than a percentage. Consumers simply subtract the specified dollar amount from their qualifying purchase total.

“Buy One Get One” (BOGO) deals also present unique savings opportunities. For example, “Buy one, get one 50% off” means the second item is half price, effectively reducing the average cost per item across the two. Similarly, “Buy two, get one free” means the cost of the third item is distributed across the first two, leading to a substantial per-item saving. Sales tax applies to the final discounted price after all offers have been factored in, not the original price.