Discount Calculator

What the discount calculator works out

A discount is a price reduction applied to a regular price. Three numbers matter, and the calculator returns all three: the money you keep, the price you pay and the effective rate you received. The rate is the one people skip, and it is the one that lets you compare two offers fairly.

The arithmetic is short. In percent mode, the saving is the price times the rate, and the final price is what is left. In dollars mode, the saving is the number on the coupon, and the rate is that number divided by the price.

This page stops at the price after the discount. Sales tax, shipping and return shipping are separate additions, and a page that folds them in can hide which part moved the total. The sales tax question gets its own section below because the rules differ by the type of coupon.

Worked example: $120 at 30 percent off

A jacket listed at $120 with a 30 percent off sign. Convert the rate to a decimal, multiply, subtract.

Now the same ticket with a $30 off coupon instead of a percentage. The saving is $30 and the final price is $90. The rate is 30 / 120 x 100 = 25 percent, so the coupon is the weaker offer by five points.

One rounding note that shows up on real receipts. A $249.99 item at 40 percent off has a mathematical discount of 99.996, which the register will charge as 100.00, leaving 149.99. Rounding the discount up costs the store four tenths of a cent and keeps the final price on a clean cent. Rounding the final price instead gives the same 149.99 here, but the two methods can differ by a cent on other prices, which is why the total on your receipt may not match a hand calculation exactly.

Percent off or dollars off: which is the better deal

Dollars off feels bigger because the number is bigger, and that is exactly the trap. A flat $20 off is a different rate at every price point.

The reverse comparison: on an $80 item, 25 percent off saves 80 x 0.25 = 20.00, while a $15 coupon saves 15.00 and works out to 15 / 80 x 100 = 18.75 percent. The percentage wins by $5 on that item. On a $40 item the same 25 percent saves only 10.00, so the $15 coupon becomes the better offer at 37.5 percent.

The rule that survives every case: turn both offers into dollars at the price you are paying, then compare. The rate is the fair way to compare across prices, and the dollars are what leaves your account.

Checking a price tag against the ad

The reverse direction comes up when a tag shows two prices and no percentage. A coat marked down from $129.99 to $89.99 gives a saving of 40.00, and 40.00 / 129.99 x 100 = 30.77 percent. A $59.99 item marked down to $44.99 saves 15.00, which is 25.00 percent. Two tags and two rates that differ a lot, and only one of them is close to the 30 percent the sign might imply.

Whether the higher price was ever real is a separate question, and in the United States it is a legal one. The Federal Trade Commission's Guides Against Deceptive Pricing, 16 CFR Part 233, say a former price is a legitimate basis for a comparison only when it was the actual, bona fide price at which the item was offered to the public on a regular basis for a reasonably substantial period of time. An inflated price set up to make a later cut look large makes the bargain a false one. The guides also warn against implying a former selling price when few or no sales were made at it.

That does not make every high anchor illegal, since asking prices and seasonal list prices exist. It does mean a "compare at" number from a third party carries less weight than the store's own recent price. When a discount looks unusually deep, the honest check is the store's price history, not the struck-through number.

A second percent off does not add to the first

"Take an extra 20 percent off reduced items" is not 30 plus 20. The second discount lands on the already reduced price, so the rates multiply rather than add.

Adding the three rates would suggest 60 percent off and a price of 48.00, which no register will produce. The correct total is 49.6 percent, and the gap widens with every extra step.

Order matters when a coupon has a minimum spend or a cap. Twenty percent off first and then $10 off is not the same as $10 off first and then 20 percent, because the second step applies to a different price. The stacked discount calculator handles two or three discounts in sequence and the order question; this page keeps to a single discount on a single price so the rate and the saving stay easy to check.

Where the sales tax lands

Tax is charged on the price the customer pays, so a store discount reduces the taxable amount. A $120 item at 30 percent off with 8 percent sales tax gives a taxable 84.00, tax of 84.00 x 0.08 = 6.72, and a total of 90.72. Charging tax on the pre-discount price would add 2.88 that the customer does not owe.

Coupons are where this stops being obvious. The California Department of Tax and Fee Administration explains the split in Publication 113, Coupons, Discounts, and Rebates: a retailer's own coupon reduces the selling price and is not taxed, while a manufacturer coupon is reimbursed to the store, and that reimbursement is part of taxable sales. The customer pays the same coupon value either way, but the tax differs.

The gap is 0.32 on a $20 purchase, and it grows with the coupon value and the local rate. Rules differ by state, and some states tax rebates differently, so treat the table as the California rule and check a local source for anywhere else.

Five ways a discount looks bigger than it is

The number on the sign is chosen to sell, and five patterns account for most of the inflation.

"Up to 70 percent off." One item in the store is at 70 percent. The rest sit at 10 or 20, and the average across the rack is usually far below the headline.

A percent off a price that was already raised. A 40 percent cut from an inflated list price can land above last month's street price. Compare the final number, not the percentage.

Minimum spend coupons. A $25 off $100 coupon is 25 percent only if you were going to spend $100. Spend 120 to use it and the effective rate on your intended $90 purchase is worse than nothing.

Member prices and app prices. The discount may require a sign-up, a subscription or a store card, and the regular price applies to everyone else.

Rounding in the store's favor. A 33 percent discount on $49.99 is 16.50, a clean number. A 33.3 percent discount is 16.65, and signs tend to use the rounder rate that costs the store less.

None of these is illegal on its own. Each one is easier to see once you convert the offer into dollars at the price you are paying.

What the discount does not tell you

A percentage is a statement about one price, not about value. Three checks catch most of the cases where the discount misleads.

Unit price. A 30 percent discount on a 12 ounce box can still cost more per ounce than a smaller box at full price. Divide the final price by the count or the weight, and compare that number across sizes.

Shipping and thresholds. A $6 saving can disappear behind $8 shipping, or behind a free shipping threshold you would not otherwise reach. Add the delivery cost before you call it a win.

Return terms. Clearance items often carry a restocking fee or a final sale rule. A 40 percent discount with a 15 percent restocking fee on a return is closer to 25 percent once the fee is paid.

Run those three checks and the discount number becomes a fact about the price instead of a claim about the deal. The calculator above gives the same three outputs in either direction, so a tag, a coupon or an online cart total can all be checked in one step.