Discount Formula: The Complete
Sale Price & Percentage Off Guide
Master the discount formula: percentage off, sale price, stacked discounts, and margin after discount.
The Discount Formula
Sale Price = Original × (1 - Discount % ÷ 100)
Regular or list price before the promotion.
Final price after the discount is applied.
Percentage off. Use to communicate savings and to plan margin.
Quick Example
Original $80, sale price $60.
Discount % = (($80 - $60) ÷ $80) × 100 = 25%
Sale price from 25% off: $80 × 0.75 = $60.
See Margin Impact of Every Discount
StoreRadar shows gross margin before and after discounts so you can run promotions without guessing profitability.
Discount Formula Variations
Percentage off, sale price, and effective discount
The standard discount formula. Result is percentage off.
Equivalent to Original - (Original × Discount %).
Subtract from original to get sale price.
Useful for reporting and margin analysis.
Do not add percentages. Multiply (1 - d1)(1 - d2) for effective rate.
Worked Examples
Step-by-step discount and sale price calculations
Basic Discount Percentage
Original price $120, sale price $90. What's the discount?
- 1 Original = $120, Sale Price = $90
- 2 Discount % = (($120 - $90) ÷ $120) × 100
- 3 Discount % = ($30 ÷ $120) × 100
- 4 Discount = 25%
You're offering 25% off.
Customer pays $90. If COGS is $50, margin = ($90 - $50) ÷ $90 = 44.4%.
Sale Price from Percentage Off
Item is $85. You want to run a 30% off promotion.
- 1 Original = $85, Discount = 30%
- 2 Sale Price = $85 × (1 - 30 ÷ 100)
- 3 Sale Price = $85 × 0.70 = $59.50
- 4 Discount amount = $85 - $59.50 = $25.50
Sale price is $59.50 (30% off).
Check margin: if COGS is $35, margin = ($59.50 - $35) ÷ $59.50 = 41.2%.
Stacked Discounts
Site-wide 20% off, plus a 10% email subscriber code. Item is $100.
- 1 First discount: $100 × (1 - 0.20) = $80
- 2 Second discount on $80: $80 × (1 - 0.10) = $72
- 3 Effective discount = ($100 - $72) ÷ $100 = 28%
- 4 Not 20% + 10% = 30%
Final price $72; effective discount 28%.
Stacking reduces margin more than a single discount. Plan COGS and caps accordingly.
Margin After Discount
Product normally $95 (50% margin). You run 25% off. COGS = $47.50.
- 1 Sale price = $95 × 0.75 = $71.25
- 2 Gross profit = $71.25 - $47.50 = $23.75
- 3 Margin after discount = ($23.75 ÷ $71.25) × 100 = 33.3%
- 4 Margin dropped from 50% to 33.3%
Margin after 25% off is 33.3%.
A 25% price cut doesn't mean 25% less margin—margin falls from 50% to 33.3%. Ensure you stay above break-even.
Common Discount Mistakes
Errors that hurt margin and clarity
Adding Stacked Discounts
Treating 20% + 10% as 30% off. The second discount applies to the already-reduced price.
Apply discounts sequentially: Price × (1 - d1) × (1 - d2). Or use effective rate: 1 - (1-d1)(1-d2).
Ignoring Margin After Discount
Running 40% off without checking that (Sale Price - COGS) ÷ Sale Price still leaves profit.
Always calculate margin after discount. Set a minimum margin and cap discount or exclude low-margin items.
Comparing to Wrong Baseline
Reporting '50% off' from an inflated compare-at price that no one paid.
Use a genuine original or regular price. Misleading compare-at prices can hurt trust and compliance.
Discounting Already-Low-Margin Items
Applying the same site-wide discount to products that already have thin margins.
Exclude or limit discounts on low-margin SKUs, or use category-specific discount rules.
Related Formulas
Metrics that connect to discounts and promotions
| Formula | Calculation | Relationship |
|---|---|---|
| Gross Margin | ((Revenue - COGS) ÷ Revenue) × 100 | Margin after discount uses same idea; discount reduces revenue |
| Markup | ((Price - Cost) ÷ Cost) × 100 | Discount reduces effective markup; plan markup with promotions in mind |
| Profit Margin | ((Revenue - All Costs) ÷ Revenue) × 100 | Net margin after discount and operating costs |
| AOV | Total Revenue ÷ Orders | Heavy discounting can lower AOV; track AOV with and without promos |
| ROAS | Revenue ÷ Ad Spend | Promos affect revenue and ROAS; measure incrementality |
Frequently Asked Questions
Common questions about discount and sale price
The discount formula is: Discount % = ((Original Price - Sale Price) ÷ Original Price) × 100. To find sale price from a percentage off: Sale Price = Original Price × (1 - Discount % ÷ 100). For example, 25% off $80: $80 × 0.75 = $60 sale price.
Sale Price = Original Price × (1 - Discount % ÷ 100). For 20% off $100: $100 × (1 - 20/100) = $100 × 0.80 = $80. Or subtract the discount amount: Discount = $100 × 20% = $20, Sale Price = $100 - $20 = $80.
Percentage off scales with price (20% off $50 = $10 off; 20% off $200 = $40 off). Fixed amount is the same regardless of price ($15 off any order). Use percentage for higher-priced items and fixed for lower AOV or thresholds.
Stacked discounts apply sequentially, not additively. 20% off then 10% off is not 30% off. First: $100 × 0.80 = $80. Then: $80 × 0.90 = $72. Effective discount is 28%. Always apply one after the other to the current price.
Margin After Discount = ((Sale Price - COGS) ÷ Sale Price) × 100. If sale price is $72 and COGS is $45: (($72 - $45) ÷ $72) × 100 = 37.5%. Ensure this stays above your minimum viable margin.
Any discount that pushes your margin below operating costs is too high. Know your COGS and break-even margin. For many ecommerce stores, discounts over 40–50% should be rare and strategic. Always verify profitability after discount.
Track Margin Before and After Discounts
StoreRadar calculates gross margin for every order and product so you can run promotions without sacrificing profitability.
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