How to calculate a discount
Updated on June 30, 2026 · by Rafael Rossi
Working out a discount is the easy part. What separates people who save money from people who only feel like they saved is reading what the discount is charging in return — because almost every discount has a counterpart, and it is rarely written down.
The two calculations
Discount amount: discount = price × (percentage ÷ 100)
Final price, directly: final = price × (1 − percentage ÷ 100)
The second form is always better: one multiplication instead of two steps. An item at $249 with 30% off comes to 249 × 0.70 = $174.30, without ever computing the discount itself.
| Discount | Multiply by | On $249 |
|---|---|---|
| 10% | 0.90 | $224.10 |
| 15% | 0.85 | $211.65 |
| 25% | 0.75 | $186.75 |
| 30% | 0.70 | $174.30 |
| 50% | 0.50 | $124.50 |
| 70% | 0.30 | $74.70 |
0% financing versus the cash rebate
This is the discount decision that carries the most money, and dealerships present it as a preference rather than a calculation. A $30,000 car, two offers:
- A: 0% APR for 60 months. Payment $500, total paid $30,000.
- B: $3,000 cash rebate, financed at 6% APR for 60 months. On $27,000 the payment is $521.99, total paid $31,319.
Here the 0% offer wins by $1,319. But the answer flips with your rate: the break-even is 4.23% APR. Below that, take the rebate and finance; above it, take the 0%. If your credit qualifies you for 3.9%, the rebate is worth more — despite "0%" sounding unbeatable.
The general principle applies to every "no interest" offer: whenever paying up front earns you a discount, declining that discount is borrowing, and the discount is the interest.
Stacked discounts do not add up
"30% off plus an extra 20% at checkout" is not 50%. The second percentage applies to the already-reduced price: 0.70 × 0.80 = 0.56, so you pay 56% of the original and the true discount is 44%.
Order does not matter — 20% then 30% gives the same result. What matters is knowing that the arithmetic sum always overstates, and it overstates more as the percentages grow.
"Buy 3, get 1 free" is not 50% off
Quantity promotions hide the percentage, and intuition consistently guesses high. The calculation is simple: divide what you pay by what you take home.
| Offer | Math | Real discount |
|---|---|---|
| Buy 1, get 1 free | 1 ÷ 2 | 50% |
| Buy 2, get 1 free | 2 ÷ 3 | 33.3% |
| Buy 3, get 1 free | 3 ÷ 4 | 25% |
| Second item 50% off | 1.5 ÷ 2 | 25% |
And there is a caveat worth more than the percentage: a quantity discount is only a discount if you were going to buy that quantity anyway. Taking three of something that expires in two months to save 33% is usually spending 200% more.
The fake reference price
"Was $899, now $449" only means something if the item genuinely sold at $899. Inflating a reference price ahead of a sale is common enough that the FTC's guidance is explicit: a former price must be a bona fide price at which the item was openly offered for a reasonably substantial period.
The defence is cheap: check the item's price history on a tracking site before buying, especially around promotional dates. A "50% off" frequently lands on a price the item already carried three weeks earlier.
Frequently asked questions
How do I find the percentage between two prices? discount = (1 − new price ÷ old price) × 100. From $249 to $174.30: 1 − 0.70 = 30%.
How do I recover the original price from a discounted one? Divide, do not multiply. Paid $174.30 at 30% off? 174.30 ÷ 0.70 = $249. Multiplying by 1.30 gives $226.59, which is wrong.
Is a coupon better than a percentage off? A flat coupon is worth relatively more on cheap items and relatively less on expensive ones. $20 off is 20% on a $100 order and 4% on a $500 one — so when you hold both, use the flat amount on the small basket and the percentage on the large one.
Does cashback count as a discount? Only once it lands, and net of the delay. 5% cashback paid in 90 days is worth less than 5% off today — and worth nothing if it is conditioned on a minimum spend you would not otherwise have made.