Discount Calculator

Stacking Discounts: The Compound Effect

When multiple discounts are applied sequentially, the total savings are always less than the sum of the individual percentages. This is because each successive discount is applied to an already-reduced price, not the original. The formula for a combined discount from two sequential discounts d₁ and d₂ is: effective discount = 1 − (1 − d₁) × (1 − d₂). For example, a 30% store sale followed by an additional 15% coupon yields: 1 − (0.70 × 0.85) = 1 − 0.595 = 40.5%, not 45%. For three discounts, extend the formula: 1 − (1 − d₁) × (1 − d₂) × (1 − d₃). This compounding principle is identical to how successive percentage losses work in investing — a 20% loss followed by a 20% gain does not bring you back to even.

Retailer Pricing Strategies & How to Spot Real Deals

Understanding how retailers set prices helps you determine whether a discount is genuine. Keystone pricing sets the retail price at double the wholesale cost, giving the retailer a 50% gross margin and plenty of room for markdowns (even a 40% off sale still yields a profit). High-low pricing alternates between a higher "regular" price and frequent deep discounts to create a sense of urgency and reward deal-seeking behavior. Stores using this strategy may inflate the original price to make the sale price appear more impressive — this is the practice behind "compare at" pricing. Everyday Low Price (EDLP) strategies, used by retailers like Walmart and Costco, keep prices consistently low with fewer promotional events, making comparison shopping easier. When evaluating any discount, check the item's historical price (tools like CamelCamelCamel for Amazon, or Google Shopping) to verify the "original" price is not artificially inflated.

When Discounts Aren't Really Savings

A discount only saves you money if you were already planning to buy the item at or near its regular price. Several common traps reduce or eliminate the perceived savings. Minimum purchase thresholds ("get 20% off orders over $100") encourage you to spend more than you intended just to qualify for the discount. Inflated original prices create the illusion of savings — if a jacket is "marked down" from $200 to $120, but it was never actually sold at $200, the discount is misleading. Spending to save promotions ("spend $50, get $10 back") only break even if you needed $50 worth of merchandise. Bulk discounts on perishable goods may lead to waste if you cannot consume the product before it expires. The true test is simple: would you buy this item at the sale price if there were no discount shown? If yes, the savings are real. If the discount itself is the primary reason you are considering the purchase, you are spending money, not saving it.