Financial education
How Discounts Affect Selling Price
A discount reduces a stated price by a percentage or fixed amount.
How the math works
A percentage discount is subtracted from the original price, but because it's applied once, stacking two discounts is not the same as adding their percentages — a 20% discount followed by a further 10% off leaves you paying 72% of the original price, not 70%.
Worked example
A $120 item with a 25% discount sells for $90, a savings of $30. If a second 10% discount is then applied to that $90 price, the final price is $81 — not $84, which is what adding 25%+10%=35% off would incorrectly suggest.
What to watch for
- Stacked discounts multiply, they don't add — always apply the second discount to the already-reduced price
- 'Percent off' and 'percent saved' can be phrased confusingly in ads — check what the final price actually is
- Sales tax is usually calculated on the discounted price, not the original
Practical takeaway
When you see multiple discounts advertised together, calculate them one at a time in sequence rather than adding the percentages.