Discount Calculator

The order things are applied in

Where a discount, a coupon and tax all apply, the sequence changes the total, and different retailers do it differently.

The usual and generally correct sequence is: percentage discount off the list price, then any fixed-amount coupon, then tax on the reduced amount. Tax applied before the discount produces a higher total and is incorrect in most jurisdictions, since tax is due on the amount actually paid.

Stacked percentage discounts multiply rather than add. Two 20% discounts give 36% off, not 40%, because the second applies to the already reduced price.

Working backwards

Recovering an original price from a discounted one requires division rather than adding the percentage back. A price of £64 after 20% off was £80, found by dividing by 0.8, not by adding 20% to £64.

Adding it back gives £76.80, which is wrong by £3.20, and the error grows with the discount. After a 50% discount, adding 50% back recovers only three quarters of the original.

The same asymmetry explains why a price cut of 50% requires a 100% increase to reverse, which is worth internalising for anyone setting prices.

Whether the saving is real

A discount is only a saving relative to a price that was genuinely charged. Inflated reference prices are prohibited in the UK, the EU and most US states, and they persist anyway.

The EU's Omnibus Directive now requires that an announced reduction show the lowest price applied in the previous 30 days, which closed the practice of raising a price briefly so the sale looks larger.

The practical check is a price history. Several browser tools track prices on major retailers, and a product that has been on sale continuously for six months has a sale price that is simply its price.

Percentage or amount

The same saving reads differently depending on how it is expressed, and retailers choose accordingly.

The rule of 100 captures it: below a price of 100 units, a percentage sounds larger; above it, an absolute amount does. Thirty per cent off £40 sounds better than £12 off; £100 off £400 sounds better than 25% off.

Neither framing changes what you pay. Converting to whichever form you find more intuitive, and comparing the actual final price against alternatives, removes the effect entirely.

The discounts that are not

Multi-buy offers can cost more than buying the quantity you wanted. Three for two on an item you need one of is a 50% price increase.

Bundle pricing sometimes exceeds the sum of the components bought separately, particularly where one component is available cheaper elsewhere. Checking is worth thirty seconds on anything expensive.

Free shipping thresholds regularly cause people to add an item costing more than the shipping saved. Spending £15 to save £4.95 of delivery is a saving only if the £15 item was wanted anyway.

It is worth knowing what the law requires of the reference price, because the rules changed recently and enforcement has followed. In the EU, the Omnibus Directive requires any announced reduction to be shown against the lowest price applied in the previous 30 days, which was written specifically to stop prices being raised briefly so the discount looks larger. UK guidance under the pricing practices code has a similar effect. A permanent sale from a price that was never charged is not merely misleading, it is actionable, and regulators have begun acting on it.