How Discounts and Markdown Savings Work
A price discount is a reduction in the original stated cost of an item or service. Retail stores, digital marketplaces, and wholesalers utilize discounts to stimulate purchase volume, liquidate seasonal inventory, or reward customer loyalty.
How to Use This Tool
- Enter the regular ticket price in Original Price.
- Specify the main sale deduction in Primary Discount (%).
- If you have an extra promo code or VIP coupon, enter it into Additional Discount.
- Optionally specify your local Sales Tax Rate to see the exact out-of-pocket register total.
Stacked Discounts: How "Double Coupons" Are Calculated
A frequent consumer misconception is that a 20% sale combined with an extra 10% coupon equates to a 30% discount. In reality, retail POS registers apply stacked discounts consecutively:
- First deduction: The primary discount is subtracted from the original ticket price.
- Second deduction: The additional discount is applied to the already lowered intermediate price, not the original sticker amount.
Sale Price = Original Price × (1 - Primary Discount / 100)Final Price = Sale Price × (1 - Extra Discount / 100) × (1 + Tax Rate / 100)
Worked Example
Sticker price: $200.00.
Store clearance: 40% off.
Intermediate price: $200 - (0.40 × $200) = $120.00.
Loyalty coupon: Extra 15% off.
Final discounted price: $120 - (0.15 × $120) = $102.00.
Sales tax (8%): $102.00 × 0.08 = $8.16.
Total out of pocket: $110.16 (Total savings before tax: $98.00 or 49% off).
Frequently Asked Questions
In almost all jurisdictions, retail sales tax is computed on the discounted final transaction price rather than the original manufacturer suggested retail price (MSRP). However, manufacturer coupons reimbursed by brands may be subject to tax on the original total in select states.
Because the second 50% discount applies to the remaining balance. If an item costs $100, the first 50% reduces it to $50. The second 50% reduces that $50 to $25 (an effective 75% total discount, not 100%).