Discount Rates

A discount is a deduction in percentage from the original price offered by the supplier.

• the base is the original price of the item - or the "list price"
• the price after discount is the "net price"

Single Discount

A single discount can be estimated as

N = L (1 - i /100)                          (1)

where

N = net price

L = list price

i = discount rate (%)

Example - Single Discount Rate

With a list price of 500 and a single discount rate of 25% - the net price can be calculated as

N = (500) (1 - (25%) /100)

= 375

Multiple Discounts

Discounts are often offered in multiple terms. The net price with multiple discounts can be calculated as

N = L (1 - i₁ / 100) (1 - i₂/ 100) ... (1 - i_N / 100)                        (2)

where

i_1..N = discount rate for term (%)

Example - Multiple Discount Rate

With a list price of 500 and a two multiple discount rates of 25% and 10% (25 - 10) - the net price can be calculated as

N = (500) (1 - (25 %) / 100) (1 - (10 %) / 100)

= 337.5

Single and Multiple Discounts Table

The table bellow can be used as a shortcut to calculate net price with multiple discount terms.

Example - Net Price with 25%, 10%, 10%

The net price of a list price 500 with multiple discount rates as 25%, 10%, 10% and 5% - or (25 - 10 - 10 - 5) in the table above - can be calculated as

N = 0.5771 ( 500)

= 289