SalevaWhat this calculator does
A discount looks simple at the counter and is easy to get wrong on paper. This calculator answers the three questions shopkeepers ask most often. Sale price takes a price and a percentage or amount off and gives the new price and the saving. Discount I can afford starts from your cost and tells you the most you can take off while keeping the margin you set. Buy X get Y free turns a multi-buy offer into the plain percentage it is worth.
How to use it
- Choose what you want to work out with the buttons at the top.
- Fill in the numbers. Results update as you type; there is no button to press.
- If a field turns orange, the number cannot work (for example a discount bigger than the price) and a short message explains why.
Worked examples
A percentage off
A shirt is priced at Rs 1,200 and you offer 15% off. The saving is 1,200 × 15 ÷ 100 = Rs 180, so the sale price is Rs 1,020.
How far you can go
The same kind of shirt cost you Rs 700 and normally sells for Rs 1,000, a 30% margin. You never want to go below a 15% margin. The lowest price that still gives 15% is 700 ÷ (1 − 0.15) = Rs 823.53, so the largest safe discount is Rs 176.47, about 17.6%. Advertise 15% and you have room to spare; advertise 20% and you are below your floor.
Buy 2, get 1 free
The customer takes three items and pays for two. They save one item in three: 33.3%. Buy 3 get 1 free is 25%, and buy 1 get 1 free is 50%. The difference from a plain discount is that the customer must take the full set, so you move more stock for the same percentage.
Why a small discount costs more than it looks
A discount comes straight out of your profit, not out of the price as a whole. Take an item that costs 70 and sells for 100: the profit is 30. A 10% discount takes 10 off the price, and all 10 comes out of your 30. You now need to sell more items just to earn the same money:
| Discount | Sale price | Profit per item | Items to sell to match 10 at full price |
|---|---|---|---|
| 0% | 100 | 30 | 10 |
| 5% | 95 | 25 | 12 |
| 10% | 90 | 20 | 15 |
| 15% | 85 | 15 | 20 |
| 20% | 80 | 10 | 30 |
That is not a reason never to discount. Clearing stock that is close to expiry, or that has sat on the shelf for months, is often worth a thin margin. It is a reason to know the number before you announce the offer.
Common mistakes
- Adding discounts together. 10% off and then another 10% off is not 20% off. 100 becomes 90, then 81: a 19% discount in total.
- Discounting your best sellers. Items that already sell well rarely need help. Offers usually do more good on slow stock.
- Agreeing a discount verbally and not recording it. The bill then shows the full price, the cash drawer shows less, and the day's figures stop adding up.
- Forgetting the cost of free items. In a multi-buy, the free item still cost you money. Check the effective price per item against your cost.
Tips for small shops
Show the original price next to the sale price, on the shelf and on the bill, so the customer can see the saving for themselves. Give an offer an end date: it makes the offer clearer and saves an argument when the price goes back up. Round sale prices to amounts that are easy to pay, rounding in your favour where the difference is small. And if you discount at the counter for regular customers, decide your floor in advance using the Discount I can afford mode, so you can say yes or no without hesitating.
Questions
Is a percentage discount better than an amount off?
Neither is better in itself. A percentage is easy to apply to a whole range of items; an amount off ("Rs 100 off") is easier for customers to picture on a single item. Use whichever is clearer for the offer, and check the margin either way.
How do I work out the original price from a sale price?
Divide the sale price by (1 − discount ÷ 100). A price of 850 after 15% off was 850 ÷ 0.85 = 1,000 before the discount.
Should the discount appear on the bill?
Yes. A separate discount line keeps the price list honest and the records accurate. The invoice generator has a discount field that shows it as its own line.
What margin should I keep as a minimum?
That depends on your costs. The break-even calculator shows the average margin you need across all sales to cover rent, wages and bills.
Related reading
- Seven billing mistakes that quietly cost a small shop money
- How to manage inventory in a small shop without spending your evenings counting
- Products, stock counts and knowing what to reorder
Saleva does this automatically at the till: a discount on a bill is recorded with the sale, so your profit report reflects what you really charged. Get the free Android app.