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How to Calculate Sales Prices Using 3 Simple Formulas

Category: Financial News

If you’re among those who contributed to the $59.1-billion estimated sales during last year’s Black Friday or you just love shopping for discounts, there’s an easy way to calculate sales prices without the calculator. Don’t worry, you need not be a math wizard, just four simple tricks will do.

Calculate by 10%

Counting by tens is easy, right? So, too, is calculating percentages by tens. In our first example, let’s say you’re looking at a $20-pair of jeans being sold at 10% discount. To calculate how much you pay, you need to get the 10% of $20.

First, imagine the price like you’d see it on a cash register. Place an imaginary decimal point followed by two zeroes at the end of the price. In our example, it should look like this: $20.00. Now move the decimal point one place to the left, so you get $2.00, which is the 10% of $20. Keep in mind that this is just the discount, not the price you’re paying. You need to subtract $2 from $20. The discounted price is $18.

Practice calculating by 10% until it comes natural to you. This will be your baseline to calculate more complicated prices such as those with cents.

Round off the price to the nearest ten

Let’s say the pair of jeans sells for $18.99 and the discount is still 10%. In cases when the price has a decimal point already, you need not imagine it. Just move the decimal point one place to the left to get the discount. In our example, the answer is $1.89 or to round it off to the nearest dime, $1.90. Now subtract $1.90 from $18.99 and you get the discounted price of $17.09. Not exactly easy, right?

There’s a faster way to do this. The trick is to estimate the price instead of deriving the exact discounted price. Often, the difference is only by a couple of dollars, which should not affect your budget. So let’s go back to our pair of jeans and round it off to the nearest ten, which is $20. Using the 10% from earlier, we arrive at the same discounted price of $18. Between $17.09 (exact price) and $18, the difference is almost trivial.

Besides calculating discounts faster, rounding off the price to the nearest ten is beneficial in two ways. First, you get a price buffer if you’re paying in cash. When you inflate your receipt a little, you make sure that when you check out you have enough money. In business parlance, you are being conservative, that is, you overestimate the cost and underestimate the income. This is done to ensure a steady cash flow. Second, rounding off to the higher ten dollars forces you to save a few dollars. Because you pay less than what you expect on checkout, a few more dollars are left in your purse. Make this a habit and you’ll be surprised how much they add up in a year.

Read more:  Interest Rates: Why Are They Increasing and How To Use Them To Save Money

Break the discount by tens

What if the discount is more than 10%? Let’s say our $20-pair of jeans is being offered at 30% off. The trick is to calculate the 10% first, then multiply it by three (because 30% is three times of 10%) and you get the discount, which is $6. Subtract it from $20 to get the final discounted price of $14.

What if we use $18.99 that sells for a 30% discount? The answer is still easy when you round the price off to the nearest ten, which is $20. Then you can apply rule no. 3.

When the discount is by 5%

Calculating by 10% is easy, but what if the discount ends by 5%? Let’s say the pair of jeans is sold at 25% off $20, its original price. Follow these steps:

  1. Round off the discount to the lower ten, which is 20%
  2. Use the 10% baseline formula to get 20% of $20, which is $4

But we still have the extra 5% discount, right?

  1. Use the 10% baseline formula again and compute another 10% of $20, which is $2
  2. Divide $2 by two (because 5% is half of 10%) and you get $1
  3. Add $1 to $4 and you get $5, which is 25% of $20
  4. Finally, subtract $5 from $20 to get the discounted price, which is $15.

With a little practice, calculating discounts by 5% should come natural to you, too, sooner than later.

Okay, we got 10% and 5% covered, but what if the discount ends by anything but these numbers? It’s safe to assume that retailers and advertisers often use 5s and 10s when giving away discounts. They have since concluded that counting by fives and tens is more attractive to consumers than by any other numbers.

By Jenny Chang

Senior writer at FinancesOnline who writes about a wide range of SaaS and B2B products, including trends and issues on e-commerce, accounting and customer service software. She’s also covered a wide range of topics in business, science, and technology for websites in the U.S., Australia and Singapore, keeping tabs on edge tech like 3D printed health monitoring tattoos and SpaceX’s exploration plans.

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