Answers the Question
How much does a product cost after a discount is applied?
Calculator for Discounted Cost
What Is the Discounted Cost?
Many vendors use discounting in order to move merchandise that is not selling quickly enough.
- Clothing might be out of season
- Technology products might be antiquated
- Food might be approaching its sell-by date
One method to move such products is to advertise increasingly large discounts until the product is sold. In many ways, this works like price skimming, in that it connects each product with the buyer who is willing to spend the most to acquire the good.
Although discounts are sometimes listed in dollars, many firms prefer to use percentages. This simplifies the process of discounting for firms that sell a variety of products at a variety of prices.
Why Is it Important?
- The final price (after discounts are applied) are often hidden from consumers. Buyers are forced to figure out the resulting prices on their own.
Formula(s) to Calculate Discounted Cost
- ORIGINAL PRICE - (DISCOUNT IN PERCENT * ORIGINAL PRICE)
- Buyers may assume that the product's original price is the value delivered, thus a significant discount is a form of consumer surplus. As a result, many firms increase the base price, making the discount amount to little, if any, actual savings.
- Some firms stack discounts on top of other discounts in order to make the total discount appear larger. A 50% discount stacked on top of a 50% discount is not 100% off. It's only 75% off.