How Discounts Actually Work

A 20% off coupon seems straightforward, but stacked discounts, sales tax timing, and psychological pricing tricks make it worth understanding the math.

Single Discount

Final Price = Original x (1 - Discount%/100)

A $80 item at 25% off: $80 x 0.75 = $60. You save $20.

Stacked Discounts

Two discounts applied one after the other are not the same as adding them together. A 20% off coupon on top of a 30% sale is not 50% off. The math: $100 x 0.70 x 0.80 = $56 -- that is a 44% total discount, not 50%.

Final = Price x (1 - D1/100) x (1 - D2/100)

Does the Order Matter?

Mathematically, no. Whether you apply 30% first then 20%, or 20% first then 30%, the final price is the same. Multiplication is commutative.

Sales Tax Timing

In most US states, sales tax is calculated on the discounted price, not the original. So if a $100 item is 25% off and your sales tax is 8%, you pay tax on $75, not $100. Your total would be $75 + $6 = $81, not $83.

Watch for Fake Discounts

Some retailers inflate the "original price" to make discounts look bigger. If an item is always "on sale," the sale price is the real price. Check price history tools before assuming you are getting a deal.