How Discounts and Sale Prices Really Work (With Real Examples)
Sale signs are designed to grab attention, but a bit of arithmetic shows what you will really pay.
The basic calculation
Sale price = original price × (1 − discount ÷ 100)
A jacket costs 80 with 25 percent off. 80 × (1 − 0.25) = 80 × 0.75 = 60. You save 20.
Discounts that stack
When a store gives "20 percent off, then another 10 percent off", the second discount applies to the already reduced price, not the original.
- 100 × 0.80 = 80
- 80 × 0.90 = 72
The total discount is 28 percent, not 30. Multiply the factors (0.80 × 0.90 = 0.72) to find the combined effect quickly.
Adding sales tax or VAT
Tax is normally added after the discount in retail. If the price is 72 and the tax rate is 8 percent, the total is 72 × 1.08 = 77.76. In some countries displayed prices already include tax, so check the label.
Reverse-engineering the original price
If you know the sale price and the discount, divide: original = sale price ÷ (1 − discount). A shirt at 45 after 25 percent off was 45 ÷ 0.75 = 60.
"Up to 70 percent off"
This means a few items may be discounted by 70 percent, and many by far less. Look at the particular item, not the banner.
Fake reference prices
A discount only matters if the "original" price was a real selling price. Some retailers inflate the "was" price. Compare the final price with other shops and, if available, a price history tool. In many places the law requires that the reference price be genuine.
Buy one, get one offers
"Buy one get one 50 percent off" on two items of 40 means paying 40 + 20 = 60 for two, which is an effective discount of 25 percent per item, not 50.
Coupons and cashback
Fixed-amount coupons (such as 10 off) give a larger percentage on cheap baskets than on expensive ones. Cashback usually arrives later, so count it as a discount only if you will really claim it.
Shipping and hidden costs
A low price with high shipping may be more expensive overall. Include delivery, import duties and currency conversion fees for international purchases.
Is it worth buying?
A big discount on something you do not need is still spending. Ask whether you would buy it at the full price, and whether you will use it.
Quick steps
- Convert the discount to a decimal factor.
- Multiply the original price.
- Apply further discounts one by one.
- Add tax and shipping.
- Compare the total with alternatives.
Do the sums once and the "sale" signs lose their power over you.
