The three discount questions
Working out a percentage off is one multiplication:
An $80 jacket at 25% off is 80 × 0.75 = $60, saving $20. The shortcut worth memorising is that you are calculating what you pay, not what you save — 25% off means paying 75%, and multiplying straight to 0.75 skips a step and a rounding error.
Going backwards from a sale price to the percentage is the reverse:
A $60 sale price on an $80 original is (80 − 60) ÷ 80 = 25%. Note the divisor is the original price. Dividing by the sale price instead gives 33%, which is the mark-up needed to get back to the original — a different and often mis-quoted number.
Stacked discounts never add up
This is the one that costs people money. A 20% off sale with an extra 10% off coupon at the till is not 30% off. The coupon applies to the already-reduced price:
The general rule is that two discounts of a% and b% combine to a total of a + b − (a × b ÷ 100). Stack 50% and 50% and you get 75% off, not free. The order does not matter — the arithmetic is the same either way — but the retailer chooses which price the coupon applies to, so check whether the second discount really is coming off the sale price and not the original.
Where tax lands
Sales tax and VAT are charged on the discounted price, so a discount quietly saves you the tax on the reduction as well. A $100 item at 20% off with 8% tax costs $86.40, not $88 — you save the $20 plus $1.60 of tax that never gets charged. Coupons that a retailer treats as a manufacturer rebate rather than a price reduction are the exception, and those are taxed on the pre-coupon price in several states.
Reading the sticker sceptically
- Buy one get one half price is 25% off, not 50% — you pay 1.5 units for 2.
- Buy two get one free is 33.3% off across the three items.
- Up to 70% off usually describes a handful of items in the deepest clearance bracket.
- Was/now pricing is only meaningful if the "was" price was genuinely charged for a reasonable period. Reference pricing rules vary by country and are widely bent.
If you want to check what a sale price does to a seller's margin rather than a buyer's wallet, the profit margin calculator is the one to use. For working the tax out separately, see the sales tax calculator.