# How to use percentages to easily calculate sales prices

Analysis: Stores often sell goods for a discounted price. Typically, a store will discount an item by a percent of the original price. In this problem, an item that originally costs \$15 is being discounted by 10%. So “10% off” refers to the rate of discount. To solve this problem, we need a procedure.

Procedure:

1. The rate is usually given as a percent.
2. To find the discount, multiply the rate by the original price.
3. To find the sale price, subtract the discount from original price.

Now that we have a procedure, we can solve the problem above.

Solution: The rate is 10%.

The discount is: 0.10 x \$15.00 = \$1.50

The sale price is calculated as follows:

 \$15.00 original price –     1.50 – discount \$13.50 sale price

Answer: The discount is \$1.50 and the sale price is \$13.50.

Let's take a look at some more examples of calculating discount and sale price.

• Analysis: The phrase, “Save 25%,” refers to the rate.
• The original price of the dress is \$40.
• Solution: The rate is 25%.

The discount is: 0.25 x \$40.00 = \$10.00

The sale price is calculated as follows:

 \$40.00 original price –    10.00 – discount \$30.00 sale price

Answer: The discount is \$10.00 and the sale price is \$30.00.

Analysis: The phrase, “Get a 20% discount,” refers to the rate.

Solution: The rate is 20%.

The discount is: 0.20 x \$12.00 = \$2.40

The sale price is calculated as follows:

 \$12.00 original price –    2.40 – discount \$ 9.60 sale price

Answer: The discount is \$2.40 and the sale price is \$9.60.

Analysis: The phrase, “50% off,” refers to the rate.

Solution: The rate is 50%.

The discount is: 0.50 x \$5.00 = \$2.50

The sale price is calculated as follows:

 \$5.00 original price –    2.50 – discount \$2.50 sale price

Answer: The discount is \$2.50 and the sale price is \$2.50.

In Example 3, note that the discount and the sale price are the same amount! Do you know what fraction is equal to 50%? Could you have done this problem using mental math? The phrase, “50% off,” is the same as, “1/2 off”. So using mental math, you would get that one-half of \$5.00 is \$2.50. Let's look at another example that uses a fraction.

Analysis: The phrase, ” off,” refers to the rate. It is expressed as a fraction.

Solution: The rate is given as the fraction .

The discount is:  x \$9.00 = \$3.00

The sale price is calculated as follows:

 \$9.00 original price –    3.00 – discount \$6.00 sale price

Answer: The discount is \$3.00 and the sale price is \$6.00.

Once again, you could calculate the discount and sale price using mental math. Let's look at another way of calculating the sale price of an item. Below is a modified version of the problem from the top of this page.

Solution: The rate is 10%. Thus, the customer is paying 90% for the DVD.

The sale price is: 0.90 x \$15.00 = \$13.50

Answer: The sale price is \$13.50.

Note that we calculated the sale price in the above problem, but we did not calculate the discount.

Summary: Stores often sell goods for a discounted price. Typically, a store will discount an item by a percent of the original price. The rate of discount is usually given as a percent, but may also be given as a fraction. The phrases used for discounted items include, ” off,” “Save 50%,” and “Get a 20% discount.”

Procedure:

1. To calculate the discount, multiply the rate by the original price.
2. To calculate the sale price, subtract the discount from original price.

## Exercises

Directions: Solve each problem below by entering a dollar amount with cents. For each exercise below, click once in the ANSWER BOX, type in your answer and then click ENTER. After you click ENTER, a message will appear in the RESULTS BOX to indicate whether your answer is correct or incorrect. To start over, click CLEAR.

 1 In a boutique, a \$14 scarf is marked, “20% off.” What is the sale price of the scarf?
 2 In an electronics store, a \$75 iPod is labeled, “Save 15%.” What is the sale price of the iPod?
 3 What is the discount for the iPod in Exercise 2?
 4 A \$30 shirt is marked, “Get  off.” What is the sale price of the shirt?
 5 In a bicycle store, a \$500 bicycle is marked, “Get a 30% discount.” What is the sale price of the bicycle?

## How to Calculate Percentage Discount – Video & Lesson Transcript

Joe wants to buy a mystery box that costs \$125. The box is on sale for 20% off. How much does the box cost after the discount?

### Step 1:

Remember the formula for finding the discount price of an item. Where S = sale price, r = discount percentage rate and p = original price, the discount formula is:

### Step 2:

Convert the percentage rate into a decimal – remove the percent sign and move the decimal two places to the left. If there's no decimal, assume one just to the right of the ones place. Here, as you can see, 20% = 0.20.

### Step 3:

Insert values (including decimal value of rate) into the discount formula:

Remember that when two variables are next to each other, it means that you multiply them.

### Step 4:

Solve the equation for S:

### Step 5:

Format the answer with the currency notation, or in this case, dollars, leaving us with \$100.

### Answer Format & Alternative Method

Let's first take a look at the answer format. Discount calculations imply dealing with monetary units, thus the answer should always be given in proper currency notation. The type of currency to use should match what's given in the original problem.

Here we used dollars, but currency could be in any form. For this example, the correct answer is \$100. Additionally, it's appropriate to answer a word problem with a full sentence.

Thus, the best answer to this word problem is: ''The mystery box costs \$100 after the discount has been applied.''

Now let's take a look at the alternative method. In the original formula, we find out the amount of the discount and remove it from what we would normally pay. There's another way to calculate the discount cost: we could figure out the percentage of the cost that's going to be paid first, and then just multiply that rate by the total cost.

In the example, there's a 20% discount, which means that Joe will have to pay for 80% of the original cost (100% – 20% = 80%). The sales price is 80% of the original price, so:

### Example 1

Mary has learned that the \$450 purse she'd been wanting is finally on sale at a 45% discount. How much will the purse cost now?

• Step 1: Use the formula S = prp
• Step 2: Convert rate from percent to decimal: 45% = 0.45
• Step 3: Plug values into formula: S = 450 – 0.45(450)

Step 4: Solving: S = 450 – 0.45(450) = 450 – 202.5 = 247.5

Step 5: Add the currency unit, which gives us \$247.50. Stated in full, the answer is: ''The purse will cost \$247.50 with the discount.''

### Example 2

This time using the second method:

Using the alternative method, how much does a \$5.50 toy cost with a 10% discount?

Step 1: If 10% is discounted, that leaves 90% to pay.

Step 2: Convert to decimal: 90% = 0.9

Step 3: Plug the variables into the formula: S = 0.9(5.50)

Step 4: Solving, we get: 4.95

## Discount Calculator: Percent Off, Sales Price + Shopping Savings for Black Friday and Cyber Monday

It is ‘Cyber Monday’ and ‘Black Friday’ time – again! All retailers are ramping up their offers and claim to be offering really good prices.

Great Deal? or Marketing Scam? Having trouble, like three-quarters of Americans, with the math necessary to determine the real value of an advertised sale? Then use these online calculators to find out whether the discount is really worth it and how high your savings are.

### At a Glance

• Black Friday is the number 1 shopping day of the year. Shops’ prices are reduced for minimum a day (often up to a week) in an attempt to get customers starting their Christmas purchases. Cyber Monday is another important sales day to look out for.
• The most commonly used discount is a percentage reduction on the original sales price. These reductions are normally promoted on Black Friday or Cyber Monday by showing the old price slashed and the percentage of savings in the new price, in absolute numbers.
• X for Y offers are also very common, where X is the number of products you may get and Y the number of products you may have to pay for.
• While consumers have the impression that prices are slashed to a historic low level for Black Friday, only 48 % of these products are actually cheaper than at some other time during the year.
• Consumers should also be wary of getting ripped off on Black Friday. Watch out for decoy offers, unrealistic discounts, artificial scarcity, hidden costs, and more.

A shocking number of Americans are unable to calculate percentage discounts without a calculator. This means shoppers are often not making the best decisions when comparing offers.

Part of the problem is that seemingly big discount numbers appeal to consumers’ emotions, while the logical portion of the brain checks out. More details about this can be found in our consumer study here.

To help you during the upcoming shopping mania, BlitzResults has prepared some tools for you to discover the best deals:

### Online Discount Calculator

The most commonly used discount is a percentage reduction on the original sales price. These reductions are normally promoted on Black Friday or Cyber Monday by showing the old price slashed and the percentage of savings in the new price, in absolute numbers.

Caution: Do not blindly trust the stated original price, which is often the so-called manufacturer´s suggested retail price (MSRP). In many cases, these are fantasy prices which are hardly ever paid by anybody in reality. You should always compare with alternative offers in other stores or online.

Please keep in mind, that some retailers do not show the new price but only the original price and the percentage number. In such cases, it might happen that you have to pay more at the cashier than you expected. With this easy-to-use percentage online calculator, you won´t overspend ever again:

### Savings Calculator – 2for1, 3for2 and 4for3

Very often you may find offers that are structured in the following way: X for Y. Where X is the number of products you may get and Y the number of products you may have to pay for. Or in simple terms: a 2for1 offer for Shirts means that you get 2 Shirts but only need to pay for 1 Shirt.

A 2for1 offer is often mistakenly interpreted as a 50% price reduction (2 Shirts = 20 USD so 2for1 means 2 Shirts for 10 USD).

But: normally retailers add fine print to these offers where it is stated, that only the cheapest item is the one which is for free. That means if you buy an expensive Shirt (i.e. 20 USD) and a cheap Shirt (i.e.

5 USD), that your price reduction would only be 5 USD (or 20% of the combined price of 25 USD).

This can be even more confusing if you find 3for2 or 4for3 offers. Please check out this easy-to-use tool to calculate how much you really save with the 2for1, 3for2, and 4for3 offers:

Caution: Delivery cost, sales taxes and other hidden cost can reduce your discount significantly. So please check carefully before pushing the buy button.

### How do you calculate the percent off?

To calculate the percent off you need to know the original price amount and the new price amount. Then you divide the new price amount by the original price amount. You will get a number that is smaller than 1. Then you have to substract this number from 1. Finally multiply this with 100 to get the percent off value.

### How do you find the original price?

The original price calculator is an online calculator that helps you to find the original price from its sales price. All you need is the sales price and the percent of discount to calculate the original price.

### Does it really make sense to buy on Black Friday?

The simple answer is: it depends. You can indeed find some hefty price reductions in stores and online during the Black Friday sales period. That´s undebatable. The challenge is to find them and eventually get the hands on the limited capacities.

Most retailers claim to be offering significant discounts. But many of these discounts are difficult to understand or calculate. And a lot of dealers use lure offers – see our full study on Black Friday Scams here (pdf, new window).

Customers should for sure compare prices properly before they purchase the goods. Some bargains look better than they actually are.

One major risk of Black Friday is that customers fall into a shopping mania and purchase items that they not really need but just buy because they appear to be cheap.

So, if you have been bargain-hunting for an expensive product already for months and it turns up in one of the many Black Friday mailings, you should catch the opportunity. Also, good deals on Children toys for under the Christmas trees or Cashmere scarfs for your loved ones can be easily found during Black Friday.

With Electrical Appliances or other Consumer Electronics, you should be more cautious and research the offers before buying. Energy consumption is a potential hidden cost to consider as well.

We tracked prices of more than 100 tech gadgets such as tablets, cameras, and large household appliances over the period of one year on major online-shops in the US.

While consumers have the impression that prices are slashed to a historic low level for Black Friday, only 48 % of these products are actually cheaper than at some other time during the year (54 products).

### How can I make the best deals?

Most retailers publish details of their offers already well in advance. So essentially the trick is preparing properly and making an action plan. Also, better know in advance what exactly you want before the sales start. This avoids riding the wave of discounts and ending up in over-spending. Here are some expert tips to save even more:

## Percentage Calculator .Co

Show Math

(Enter values into the blue boxes. Select a different box to be the answer box if needed.) Answers are rounded to 7 decimal places.

### Percentage Calculator in Common Phrases:                 see examples

(Enter values into the blue boxes. Answers will appear in the black boxes.)Answers are rounded to 7 decimal places.

### Add or Subtract a Percentage                 see examples

Calculate: tips, sales price, percent off, discounted price, price with sales tax, etc.

(Enter values into the blue boxes. Answer will appear in the black box.)Answers are rounded to 7 decimal places.

### Percent Error                 see examples

Use when comparing a theoretical (known) value to an experimental (measured) value.

Percent Error  =

abs(Experimental Value – Theoretical Value)abs(Theoretical Value)

x 100% (where abs = absolute value)

(Enter values into the blue boxes. Answer will appear in the black box.)Answers are rounded to 7 decimal places.

Use when comparing two values where neither value is considered a start value or a reference value.

Note: There is no standard equation for percent difference for all circumstances. The equation used here divides the difference between the two values by the average of the two values (see equation below). Some cases may require you to divide by the minimum of the two values or the maximum of the two values, etc. Please check that the equation used here fits your circumstance.

Equation used:Percent Difference  =

abs(One Value – Another Value)abs((One Value + Another Value)/2)

x 100% (where abs = absolute value)

(Enter values into the blue boxes. Answer will appear in the black box.)Answers are rounded to 7 decimal places.

Percent means per 100 or parts per 100. It can be used to describe a portion of a whole or part of a whole. It comes from per cent which is short for per centum which means per hundred. The percent sign is: % 1 percent (1%) = 1 part per 100 = 1/100 = 0.01   (a portion less than a whole) 100 percent (100%) = 100 parts per 100 = 100/100 = 1   (a portion equal to a whole)

110 percent (110%) = 110 parts per 100 = 110/100 = 1.1   (a portion greater than a whole)

### Percentage:

An amount per 100 that refers to a portion of a whole (in a general way) typically without using a specific number.

### Percent vs. Percentage

The word percent is typically used with a number (example: 10 percent) while percentage is typically not used with a number (example: what percentage of the marbles are red?). An exception is percentage points (example: 2 percentage points).

### Percentage Calculator:

Calculator or tool that uses the percentage formula to solve for a desired value in that formula. The percentage formula contains three variables. If any two of the variables are known, the third variable can be calculated.

### Percentage Formula:

• Formula used to solve percentage problems that relates two ratios where one of the ratios is a part or portion per 100 and the other ratio is a part or portion per a whole. Where:
• A% of B is C                                     as in:  10% of 90 is 9      where A=10, B=90, C=9
• A/100 x B = C                                   as in:  10/100 x 90 = 9
• A100 = CB                                               as in:  10100 = 990
• percent100 = is(part)of(whole)                           as in:  10100 = 990
• A = (C / B) x 100                              as in:  A = (9 / 90) x 100 = 10

The percentage formula is: Rearranging: The percentage formula is sometimes expressed as: Solving for each of the variables yields: B = C / (A / 100)                               as in:  B = 9 / (10 / 100) = 90 C = (A / 100) x B                              as in:  C = (10 / 100) x 90 = 9

Note: A% = A/100 because % means per 100

### How are percentages used?

• store discounts: 25 percent off sale
• sales tax is typically a percentage of purchase price: 8% sales tax
• interest rates for savings accounts are typically shown as an annual percentage rate (apr): 1.5% apr
• interest rates charged by credit card companies and mortgage companies are shown as an annual percentage rate.
• interest rate changes: interest rates rose one percentage point from 4.5% to 5.5%
• statistics: the margin of error is plus or minus four percentage points
• credit card rewards: 2% cash back for certain purchases
• news: approval ratings, employment rate, and surveys can be expressed using percentages
• laptops, tablets, and cell phones usually have a battery charge percentage indicator
• weather forecast: 20 percent chance of rain
• probability: the chance to win a prize is 1 in 10 or 10 percent
• humidity: the humidity level is 65%
1. Percentages can be used to make the relationship between a portion and a whole easier to understand.
2. Anytime you need to solve a percentage problem, the percentage calculator is here to help.

## Sale Price Calculator

Calculate the sale price you will pay for an item based on the type of discount in the sale promotion:

• Percent off list price
• Fraction off list price
• Multi-item discount

You can also compare discounts to find the lowest price for an item. Enter a percentage off price, fraction off price, multiple items for the price of one or other “two-for” type discounts. Compare the final discounted price for each in the answer table.

Delete any pricing inputs you don't need for your calculations.

### Percent Off Price Formula

Discounted price = List price – (List price x (percentage / 100))

Example: Sale price is 25% off list price of \$130

1. Convert 25% to a decimal by dividing by 100: 25/100 = 0.25
2. Multiply list price by decimal percent: 130*0.25 = 32.50
3. Subtract discount amount from list price: 130 – 32.50 = 97.50
4. With the formula: 130 – (130*(25/100)) = 130 – (130*0.25) =

130 – 32.50 = 97.50

5. 25% off \$130 is \$97.50

### Fraction Off Price Formula

Discounted price = List price – (List price x fraction)

Example: Sale price is 1/3 off list price of \$120

1. Multiply list price by the fraction discount: 120*1/3 = 40
2. Subtract discount amount from list price: 120 – 40 = 80
3. With the formula: 120 – (120*1/3) =

120 – 40 = 80

4. 1/3 off \$120 is \$80

### Multi-Item Discount Formula

Discounted price per item = (Number of items at list price x list price) / Number of items in discount deal

Example: Sale is 4 items for the price of 3. Regular list price is \$20.

1. Multiply number of items at list price, by list price: 3*20 = 60
2. You are paying \$60 and you'll get 4 items
3. The discount price for each item is 60/4 = \$15
4. With the formula: (3*20) / 4 =

60 /4 = 15

5. Buying 4 for 3 at \$20 each means you'll spend \$60 for 4 items; the per item discounted price is \$15. If you compare to the non-discounted price of \$20, you can save \$5 per item with this multi-item discount sale.

### Percent Of or Fraction Of Price

You may occasionally see sales promotions for “Percent Of” or “Fraction Of” list price. To do these calculations, simply multiply the list price by the discount to get the sale price. Examples:

Sale price is 80% of list price of \$50

1. Convert 80% to decicmal by dividing by 100: 80/100 = 0.8
2. Multiply list price by decimal rate: \$50*0.8 = \$40.
3. Sale price is \$40

Sale price is 2/3 of list price of \$90

1. Multiply list price by 2/3: \$90*2/3 = 180/3 = \$60
2. Sale price is \$60

## How to Calculate a Discount

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1. 1

Convert the percentage discount to a decimal. To do this, think of the percent number with a decimal to the right of the last digit. Move the decimal point two places to the left to get the converted decimal.

[1] You can also use the %{displaystyle \%} sign on a calculator.

• For example, you might want to calculate the sale price of a pair of shoes that is regularly \$69.95. If the shoes are 25% off, you need to convert 25% to a decimal by thinking 25%=25.00%=.25{displaystyle 25\%=25.00\%=.25}.
2. 2

Multiply the original price by the decimal. You can multiply the decimal by hand, or use a calculator. This will tell you the discount, or what value is being taken off the original price.[2]

• For example, to find the 25% discount on a pair of \$69.95 shoes, you would calculate 69.95×.25=17.49{displaystyle 69.95 imes .25=17.49}.
3. 3

Subtract the discount from the original price. To subtract decimals, line up the decimal points and subtract as you would whole numbers. Be careful to drop the decimal point down into your answer. You can also use a calculator. The difference will be the sale price of the item.[3]

• For example, if a pair of shoes that are originally \$69.95 have a discount of \$17.49, calculate the sale price by subtracting:69.95−17.49=52.46{displaystyle 69.95-17.49=52.46}. So, the shoes are on sale for \$52.46.
1. 1

Round the original price to the nearest ten. Use normal rounding rules to round up or down. Doing this will make it easier to calculate the percent discount of the number.[4]

• For example, if the original price of a shirt is \$47.89, round the price up to \$50.00
2. 2

Calculate 10 percent of the rounded price. To mentally calculate 10% of a price, think of the price written as dollars and cents with a decimal point. Then, move the decimal point one place to the left. This will show you the number that is equal to 10%.[5]

• For example, to calculate 10% of \$50, think \$50=\$50.00=\$5.00{displaystyle \$50=\$50.00=\$5.00}. So, 5 is 10% of 50.
3. 3

Determine the number of tens in the percent off. To figure out the number of tens, divide by the percentage by 10 using normal division rules. Don’t worry about fives in the percentage for now.

• For example, if a shirt is 35% off, you would need to know how many tens are in 35. Since 35÷10=3.5{displaystyle 35div 10=3.5}, there are 3 tens in 35.
4. 4

Multiply 10% of the rounded price by the appropriate factor. The factor is determined by the number of tens in the percent off. Since you determined what 10% of the price is, find a larger percent by multiplying by the number of tens.

• For example, if you found that 10% of \$50 is 5, to find out how much 30% of 50 is, you would multiply \$5 by 3, since there are 3 tens in 30: 5×3=15{displaystyle 5 imes 3=15}. So, 30% of \$50 is \$15.
5. 5

Calculate 5% of the rounded price, if necessary. You will need to do this step if the percent off discount ends in a 5 rather than a 0 (for example, 35% or 55% off). It is easy to calculate 5% by simply dividing 10% of the original price by 2, since 5% is half of 10%.

• For example, if 10% of \$50 is \$5, then 5% of \$50 is \$2.50, since \$2.50 is half of \$5.
6. 6

Add the remaining 5% to the discount, if necessary. This will give you the total estimated discount of the item.

• For example, if a shirt is 35% off, you first found 30% of the original price was \$15. Then you found that 5% of the original price was \$2.50. So adding the values of 30% and 5%, you get \$15+\$2.50=\$17.50{displaystyle \$15+\$2.50=\$17.50}. So, the estimated discount of the shirt is \$17.50.
7. 7

Subtract the discount from the rounded price. This will give you an estimate of the sale price of the item.

• For example, if the rounded price of a shirt is \$50, and you found the 35% discount to be \$17.50, you would calculate \$50−\$17.50=\$32.50{displaystyle \$50-\$17.50=\$32.50}. So, a \$47.89 shirt that is 35% off is about \$32.50 on sale.
1. 1

Calculate the exact sale price. A television is originally priced at \$154.88. It now has a 40% discount.

• Convert the percentage discount to a decimal by moving the decimal two places to the left: 40%=40.0%=.40{displaystyle 40\%=40.0\%=.40}.
• Multiply the original price by the decimal: 154.88×.40=61.95{displaystyle 154.88 imes .40=61.95}.
• Subtract the discount from the original price: 154.88−61.95=92.93{displaystyle 154.88-61.95=92.93}. So, the sale price of the television is \$92.93.
2. 2

Find the exact sale price of a camera that is 15% off. The original price is \$449.95.

• Convert the percentage discount to a decimal by moving the decimal two places to the left: 15%=15.0%=.15{displaystyle 15\%=15.0\%=.15}.
• Multiply the original price by the decimal: 449.95×.15=67.49{displaystyle 449.95 imes .15=67.49}.
• Subtract the discount from the original price: 449.95−67.49=382.46{displaystyle 449.95-67.49=382.46}. So, the sale price of the camera is \$382.46.
3. 3

Estimate the sale price. A tablet is regularly \$199.99. On sale, it is 45% off.

• Round the original price to the nearest ten. Since \$199.99 is only 1 cent away from \$200, you would round up.
• Calculate 10% of the rounded price. Moving the decimal one place to the left, you should see that 10% of \$200.00 is \$20.00.
• Determine the number of tens in the percent off. Since 10×4=40{displaystyle 10 imes 4=40}, you know that there are 4 tens in 45%.
• Multiply 10% of the rounded price by the appropriate factor. Since the percentage off is 45%, you would multiply 10% of the rounded price by 4: \$20×4=\$80{displaystyle \$20 imes 4=\$80}
• Calculate 5% of the rounded price. This is half of 10%, which is \$20. So half of \$20 is \$10.
• Add the remaining 5% to the discount. 40% is \$80, and 5% is \$10, so 45% is \$90.
• Subtract the discount from the rounded price: \$200−\$90=\$110{displaystyle \$200-\$90=\$110}. So the estimated sale price is \$110.

• Question How do I calculate a discount if the rate is unknown? Assuming you know the original price and the sale price of an item, subtract sale price from original price to determine the discount amount. Next, divide the discount amount by original price.
Convert this decimal amount into a percentage. This percent is the discount rate. For an example, a lamp shows a discount price of \$30 with an original price of \$50. \$50 – \$30 = \$20
20 / 50 = 0.40
0.40 = 40%
• Question A product that regularly sells for \$425 is marked down to \$318.75. What is the discount rate? If the product regular price is \$425 and the discounted price is \$318.75. Divide the disc. price to orig. price EX. 318.75 / 425= 0.75, then multiply the 0.75 into 100 and 100 is the total % of an item Ex. 0.75×100= 75, now subtract the 100 to 75 . Ex. 100- 75= 25%. So the discount rate is = 25%.
• Question Can I convert the decimal to a fraction, then multiply by the original price? Yes, as long as your conversion is right.
• Question How do I calculate the marked price before discount? Divide by the percent discounted, taken from 100%. Say an item on 20% discount has a price tag reading £40. 100% – 20% is 80%. £40 / 0.8 = £50. (The answer, 80% of £50 is £40).
• Question How would I calculate a discount of 2.5 percent on an item?

## How to Calculate a 20 Percent Markup

Updated May 14, 2018

By Lisa Maloney

If you've ever bought clothes on sale, you're familiar with the concept of a markdown, or reducing the price by a given percentage. A markup works the opposite way: The price is increased by a given percentage.

Retailers do this every day, because they pay one price for their goods (the wholesale price), and then add a markup to create the retail price they sell to you at.

Often, the markup from wholesale price to retail price can be as much as 50 percent, but some retailers will sell at lower markups such as 20 percent.

Multiply the original price by 0.2 to find the amount of a 20 percent markup, or multiply it by 1.2 to find the total price (including markup). If you have the final price (including markup) and want to know what the original price was, divide by 1.2.

If you know the wholesale price of an item and want to calculate how much you must add for a 20 percent markup, multiply the wholesale price by 0.2, which is 20 percent expressed in decimal form. The result is the amount of markup you should add.

So, if you're marking up a pair of pants that cost \$50, the markup amount is:

If you want to calculate the total price after markup, add the original price plus the markup:

So the final price of the pants would be \$60.

If you want to go straight to the total price of the item after a 20 percent markup, multiply the wholesale price by 1.2. This represents 100 percent of the original wholesale price plus the 20 percent markup, or 120 percent total, expressed in decimal form.

Using the same pair of pants as the previous example, you'd have:

Note that you get the exact same result as working out the markup on its own and then adding it to the original price, but you've saved yourself a step.

Here's one more angle to consider: What if you know how much an item costs after the 20 percent markup, and you want to know what the original price was before the markup? Think back to the previous example: You know that after a 20 percent markup, the final price is 120 percent of the original. So you can calculate backward to the original price by dividing by 120 percent expressed in decimal form, which is 1.2.

For example, knowing that the pair of pants you've been considering costs \$60 after the markup, it comes as no surprise that when you calculate thusly:

…you end up back at the original price of the pants.

## How Do You Calculate a Sales Price?

By William Adkins Updated February 01, 2019

For a small business, setting the prices of the products it offers is a critical task. If you price your items too high, your customers will go to your competitors. You must select sales prices that are adequate to cover your costs but will also enable you to make a profit. Several variables affect product pricing, such as your sales volume, overhead costs and the cost of the products.

There are two often-used approaches in calculating a sales price. The traditional method is to add a markup percentage to the cost of the product. Alternatively, you can calculate a sales price in terms of the gross margin you want to earn from selling the product.

When you calculate a sales price, you must allow for the cost of the product, overhead and profit. Overhead costs include staff salaries, rent, utilities, taxes, insurance, advertising and administrative costs.

The traditional method of calculating a sales price is to add a markup percentage to the cost of the product.

This approach has the virtue of simplicity, but it may be difficult to determine if the price will cover costs.

To calculate a sales price using the traditional markup percentage method, first determine the cost of the product. Typically, you add shipping charges to the price you paid for the item. Multiply the total cost by the markup percentage to find the markup amount. Add the markup amount to the cost of the item to set the price.

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Suppose you paid \$25 each for widgets, and you decide to use 100 percent markup. This is a common markup for retailers. Multiply \$25 by 100 percent, and add the result to the \$25 cost. This yields a sales price of \$50.

An alternative approach is to plug the cost of a product into a formula that yields the gross margin and gross margin percentage.

Because gross margin is the figure commonly used when determining if a business is making enough to cover all costs and also to produce a profit, it may be more useful. Whichever approach you use, it is important not to confuse the two approaches.

The dollar amount added to the cost of a product may be the same, but a traditional markup percentage is a different number than a gross margin percentage.