DISCOUNT
Discount is the reduction in the price of goods or services offered by
shopkeepers at the marked price. This percentage of the rebate is usually
offered to increase the sales or clear the old stock of goods. The List price
or Marked price is the price of aan
n article as declared by the seller or the
manufacturer, without any reduction in price. Selling price is the actual
price at which an article is sold after any reduction or discounts in the list
price. "Off", "Reduction" are some common terms used to describe
desc
discounts. It should be noted that discount is always calculated on the
Marked price (List price) of the article. The formula to calculate discount is:
Discount = List Price - Selling Price
Discount (%) = (Discount/List Price) × 100
Example: If the list
st price of a product is $4500, and there is a 40% discount
on it, calculate the price at which the customer can buy the product.
40% discount on the list price = (40/100) × 4500
Discount ($)= 180000/100 = $1800
Therefore, Selling Price = List Price - Discount ($) = $4500 − $1800
Therefore, after the discount, the customer can buy the product for $2700.
Discount Rate
When the price of an article is reduced and sold it means a
discount has been offered. When the price reduced is expressed as
a percentage, it is called a discount percentage or the discount
rate. The formula to calculate the discount rate is:
Discount (%) = (List price - Selling Price)/ List Price × 100
Discount (%) = (Discount/List Price) times; 100
Discount Rate Calculation
To calculate the discount, you must have the list price (marked
price) and the selling price of the product you are buying.
Example: If the list price of a book is $50, and $10 discount is
offered on the book, then the discount percentage is calculated as
follows.
Discount % = (Discount/List Price) × 100
List price = $50; discount = $10
Discount (%) = (10/50) × 100
= 100/5
= 20%
Types of Discounts
Discounts are offered while we purchase an item from a seller or
a manufacturer. There are three types of discounts:
Trade Discount: This type of discount is offered by the
distributor to the retailer and not to the end customer. A
distributor is one who holds huge quantities of a product and
offers it at a reduced price to a retailer, who runs a unit or a
shop selling the product. This type of discount is offered to
sell the product easily.
Quantity Discount: If a customer buys a product in large
numbers, then quantity discounts are offered. This type of
discount is offered to tempt the customers to buy a product in
large quantities.
Promotional Discount: Promotional discounts are offered
when a new product is to be promoted or if a stock clearance
is to be done. This is usually advertised as offering something
extra for buying a certain number of items. For example, 'Buy
2 Get 1 Free' is a common example of a promotional discount.
Example 1: Find the discount received by Bob on a chair, if the
selling price of the chair is $7 and the list price is $10?
Solution:
Given, list price = $10 and selling price = $7.
Therefore, discount = List price - Selling price.
Discount = $10 - $7
= $3.
Hence, Bob received a discount of $3.
Example 2: The price tag printed on a T-shirt showed $25, but
Daniel paid $20 for it since there was a discount on it. Find the
discount in percentage.
Solution:
Given, list price = $25 and selling price = $20.
Therefore, discount = list price - selling price
= $25 - $20
= $5
Discount % = (Discount/List Price) × 100
= (5/25) × 100
= (1/5) × 100
= 100/5
= 20%
Hence, Daniel got a discount of 20%.
