Discount Formulas Explained — Sale Price, Reverse Discount, Markup and More
Discounts appear everywhere — retail sales, B2B negotiations, e-commerce coupon codes, GST calculations. Understanding the math behind discounts helps you spot the best deal, set the right selling price, and avoid being misled by "sale" marketing. Here are all the key formulas explained clearly.
Basic Discount Formula
Sale Price = Original Price × (1 − Discount% / 100)
Amount Saved = Original Price − Sale Price
Example: ₹1000 @ 30% off → ₹1000 × 0.70 = ₹700
Amount Saved = Original Price − Sale Price
Example: ₹1000 @ 30% off → ₹1000 × 0.70 = ₹700
Reverse Discount — Finding Original Price
If you know the final price and the discount applied, you can find what the original price was before the discount:
Original Price = Sale Price ÷ (1 − Discount% / 100)
Example: Final price ₹800 with 20% off → ₹800 ÷ 0.80 = ₹1000
Example: Final price ₹800 with 20% off → ₹800 ÷ 0.80 = ₹1000
💡 Common mistake: Many people think 20% off ₹800 = original ₹960. That's wrong. ₹800 is already the discounted price. The correct original is ₹1000. Always use the reverse formula.
Coupon Stacking — Why 20% + 10% ≠ 30%
When coupons are applied sequentially, they don't add — they compound. A 20% coupon followed by a 10% coupon gives:
After Coupon 1: ₹1000 × 0.80 = ₹800
After Coupon 2: ₹800 × 0.90 = ₹720
Effective discount: 28% (not 30%)
After Coupon 2: ₹800 × 0.90 = ₹720
Effective discount: 28% (not 30%)
Markup vs Margin — The Most Confused Pair in Business
- Markup % = (Profit ÷ Cost Price) × 100. A 40% markup on a ₹600 item = sell at ₹840.
- Margin % = (Profit ÷ Selling Price) × 100. Margin on ₹840 item with ₹240 profit = 28.6%.
- Key insight: For the same transaction, markup % is always higher than margin %. Many businesses accidentally underprice when confusing the two.
📊 B2B tip: Buyers think in terms of discount %. Sellers should think in terms of margin %. Make sure you know which basis any "percentage" offer is referring to before agreeing.