About Discount Formula
Discount Definition- A discount is a reduction in the price of goods or services provided by stores at the given price. This percentage of the rebate is usually offered to encourage sales or get rid of old stock. The list price, also known as the tagged price, is the price that a seller or manufacturer has published for an item, excluding any reductions. The selling price is the actual price at which an item is sold after any reductions or discounts in the list price. "Off" or "reduced" are terms used to describe discounts. It's worth noting that the discount is always applied to the marked price of the item (List price). More Maths Formulas on the parent's page.
The discount formula is as follows:
- Discount = List Price - Selling Price
- Discount (%) = (Discount/List Price) × 100
Example: Calculate the price at which a consumer can purchase a product with a list price of $4500 and a 40% discount.
- 40% discount on list price = (40/100) × 4500
- Discount ($) = 180000/100 = $1800
- Hence, Selling Price = List Price - Discount ($) = $4500 − $1800
- Thus, after the discount, the customer can buy the product for $2700.
Discount Rate
When the price of an item is reduced and sold, a discount is given. When a price reduction is expressed as a percentage, a discount percentage or discount rate is employed. The following formula is used to compute the discount rate:
- Discount (%) = (List price - Selling Price)/ List Price × 100
- Discount (%) = (Discount/List Price) times; 100
Discount Rate Calculation
You'll need the list price (marked price) and the selling price of the thing you're buying to figure out the discount.
example: When a book's list price is $50 and a $10 discount is offered, the discount percentage is computed as follows.
- Discount % = (Discount/List Price) × 100
- List price = $50; discount = $10
- Discount (%) = (10/50) × 100
- = 100/5
- = 20%
Types of Discounts
Discounts are given when we buy something from a retailer or a manufacturer. Discounts are divided into three categories:
- Trade Discount: The distributor offers this type of discount to the retailer rather than the final customer. A distributor is a company that keeps large quantities of a product and sells it to a retailer, who owns a store or a unit that sells it. This form of discount is presented to make it easier to sell the product.
- Quantity Discount: When a buyer buys a large quantity of a product, a quantity discount is offered. This form of discount is offered to entice buyers to purchase huge quantities of a product.
- Promotional Discount: When a new product is being advertised or stock is being cleared, promotional discounts are offered. This is typically offered as a bonus for purchasing a particular number of things.
Solved Example based on Discount Formulas
Example-1 The marked prices of articles in a shop are 20% more than their cost prices. The shopkeeper gives a discount of 40 on a purchase of 960. What is net percent profit?
(a) 10 % (b) 12 % (c) 15 % (d) Data inadequate
Answer-(c)
Suppose CP = 100
MP = 100 + 20 = 120
Discount % = 4000/960
= 120 – 5 = Rs 115
Profit = 115 – 100 = 15
Profit = 15%
Arithmetic - Profit and Loss – Medium
Example-2. A trader instead of raising the mark-up by 20% discounted the cost by price by 20% while stitching the price tag on its product. Further, the trader offers a discount of 6.25% to its customer. In this process, the trader incurs a loss of Rs. 37.5 on a single article. What is the selling price of that article?
(a)417.5 (b)112.5 (c)365.5 (d)254.6
Answer-(b)
Consider CP = 100, then
Tag price = 80
SP, after discount = 75
Total loss = 25
Rs. 25 are being less at CP of Rs. 100
Rs. 37.5 are being less at CP of Rs.
Hence, SP = 150-37.5 = 112.5
Alternatively : 112.5 + 37.5 = 150 = CP
Again 150 x 0.8 x .9375 = 112.5 = SP
Hence, option (b) is correct.
Quantitative Aptitude – Profit, loss and Discount – Medium
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