Discount - 1

1 The reduction in price from the marked price of an item gives the discount.

For example:

• James bought a pair of jeans from a wholesale dealer for $40 and put a price tag of $200 on them. For two months, he could not sell this pair of jeans. He then
reduced the price to $120, selling the jeans in a week.

The price at which James intended to sell = the marked price = $200.

The reduced price at which he sold = $120.

• The reduction in price = $200 - $120 = $80 = discount

• The discounted price = $120.

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Discount - 2

2 The discount percentage is always on the price that is discounted (reduced).

For example:
• If the price of $200 is reduced by 40% (discount percentage), the price = $200 - 40% of $200 = $200 - $80 = $120 = discounted price.

The following table reflects the discount percentage, reduction, and the discounted price on different prices.

Price Discount Percentage Reduction Discounted Price

$200 20% 20% of $200 = $40 $200 - $40 = $160

$200 - $80 = $120
$200 40% 40% of $200 = $80

$200 50% 50% of $200 = $100 $200 - $100 = $100

$200 60% 60% of $200 = $120

$200 - $120 = $80

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Discount - 3

3 In the case of successive discounts, the total discount is NOT equal to the sum of the discounts.

For example:
• On the list price of $200, James offered a discount of 20% followed by a discount of 30%.

Initial Price Discount % Reduction Discounted Price

$200 20% 20 200 – 40 = $160

× 200 = $40
100
Base
changes
$160 30% 30 160 – 48 = $112
× 160 = $48
100

Overall Discount = $200 - $112 = $88

88 × 100
Overall Discount % = = 44% ≠ 50% (= 30% + 20%)
$200

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Discount - 4

4 The order of percent discount does not change the final discounted price.

• Since the successive discount percentage has a multiplying effect on the final discounted price, the order of such discounts doesn't matter in the final discounted price.
• If x = the marked price, y = percentage discount, z = percentage discount, we can analyze the case as follows.

$x y% xy xy y
x- = x(1 - )
100 100 100

y z% y z y y z
x(1 - ) x(1 - ) x(1 - ) - x(1 - )
100 100 100 100 100 100
y z
= x (1 - ) (1 - )
100 100

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Discount - 5

5 The final discounted price obtained when the discount percentage is applied prior to the discount in dollar value is lower than the one obtained
when the discount percentage is applied after the discount in dollar value.

If x = the marked price, y = the percentage discount, and z = discount in dollar value, we can understand it as follows:

y% $z $z y%
y y
Discounted PriceA = x(1 - )–z Discounted PriceB = (x – z) (1 - )
100 100
y y
Is x(1 - )–z < (x – z) (1 - ) ?
100 100

y y
⇒ x(1 - ) – z < (x – z) (1 - )
100 100

y y y
⇒ x(1 - ) – z < x(1 - ) - z(1 - )
100 100 100

y
⇒ -z < -z (1 - )
100

yz
⇒ -z < -z +
100
Discounted PriceA < Discounted PriceB
yz
⇒0 <
100

⇒ yz > 0 (always true) © Copyright YPS Corporation

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