Calculating discounts is a fundamental skill every businessperson, especially those in sales or marketing, must understand. Discounts aren’t just price cuts to attract customers, but also strategies that can impact profits, inventory, and even customer loyalty.
With proper calculation, discounts can increase sales volume without incurring losses. Conversely, miscalculating discounts can actually erode profit margins.
Have you ever seen a promotion that says “Up to 70% off” and immediately felt drawn to a purchase? Well, behind that number lies a carefully planned strategy and formula. This article will thoroughly discuss the types of discounts commonly used in businesses, as well as how to calculate them correctly. Let’s take a look!
Types of Discounts
It turns out that there are many types of discounts commonly used in the market. Each type has a different implementation in business. Here are some of them:
1. Percentage Discount
Percentage discounts are the most commonly used and easiest for customers to understand. A percentage discount means the customer receives a certain percentage off the original price of the product. For example, if a product priced at Rp200,000 is discounted 20%, the customer would only pay Rp160,000.
This type of discount is effective in attracting buyers because the percentages look visually appealing, such as 30%, 50%, or even 70%. Business owners often use this strategy when they want to increase sales quickly or clear out old stock.
2. Nominal Discount
Unlike percentage discounts, nominal discounts offer a fixed amount. For example: “Rp50,000 off for a minimum purchase of Rp300,000.” While seemingly simple, nominal discounts are often more appealing to customers because they know exactly how much they’re saving.
For businesses, this type of discount offers flexibility because the amount can be adjusted to maintain profit margins. Nominal discounts are often used in bundling campaigns or special promotions, such as brand anniversary events.
3. Bundling Discount
This discount is usually offered to reduce stock of slow-selling products. Often, it’s offered in conjunction with a high-demand product. For buyers, this discount is quite advantageous, as they can purchase more than one product at a more affordable price than buying them individually.
4. Quantity Discount
This type of discount is offered to customers who purchase in bulk. For example, “Buy 10 get 1 free” or “20% off purchases of 20 units or more.” Quantity discounts are typically used by B2B businesses or wholesalers to encourage large-volume purchases.
5. Shipping Cost Discount
Finally, shipping discounts are often offered by online businesses. These discounts are usually based on the purchase amount or specific location. For example, free shipping for the Greater Jakarta area, or reduced shipping costs for areas outside Java.
How to Calculate Discounts
Unfortunately, many business owners don’t understand how to calculate discounts correctly. As a result, instead of generating profits, discounts actually lead to losses. To avoid further confusion, here’s how to calculate discounts:
1. How to Calculate Percentage Discount
The general formula for calculating a percentage discount is:
Price After Discount = Original Price – (Original Price × Discount Percentage)
Example:
A product priced at Rp300,000 is discounted by 25%. The discount is Rp300,000 × 25% = Rp75,000.
So, the price after the discount is Rp. 300,000 – Rp. 75,000 = Rp. 225,000.
2. How to Calculate Double Discount
A double discount is typically used when there are two consecutive price cuts, for example, “30% + 10% off.” Many customers mistakenly assume that the total discount is 40%, but the calculation is different.
The formula is:
Price After Discount = Original Price × (1 – First Discount) × (1 – Second Discount)
Example:
The initial price is Rp500,000, the first discount is 30%, and the second discount is 10%. The price after the first discount = Rp500,000 × (1 – 30%) = Rp350,000. Then the second discount is 10% of Rp350,000 = Rp315,000.
So, the total discount is not 40%, but around 37%.
3. How to Calculate Nominal Discount
Nominal discounts are much simpler because you just subtract the original price from the discount amount.
Price After Discount = Original Price – Discount Amount
Example:
The product price is Rp250,000 and the discount is Rp50,000. The final price is Rp250,000 – Rp50,000 = Rp200,000.
4. How to Calculate Discounts Based on Quantity
For this type of discount, the formula usually depends on the purchase amount.
Example:
The price of one product is Rp100,000, with a 10% discount for purchases of at least 10 units. Therefore, the unit price after the discount = Rp100,000 – (Rp100,000 × 10%) = Rp90,000. If the customer buys 10 units, the total price is Rp900,000.
Discounts are a powerful marketing tool when used strategically and with the right calculation. By understanding how to calculate discounts and understanding the different types, you can create promotions that are effective, attractive, and still profitable for your business.
Not only is it important to understand how to calculate discounts, but you also need to be able to manage your business more optimally. To keep operations running smoothly, use the Labamu app. This digital cashier app comes with the
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