Calculating Effective Discount on Successive Discounts: A Comprehensive Guide

When dealing with financial transactions, understanding the effective discount on successive discounts is crucial for both buyers and sellers. Successive discounts are a common practice in sales where a percentage discount is applied to the price after the first discount has been taken. This article will walk you through the process of calculating the effective discount when two or more discounts are applied consecutively.

Understanding Successive Discounts

A successive discount occurs when one discount is applied to an original price, and then another discount is applied to the remaining price after the first discount. The effective discount is the overall discount percentage that results from these successive discounts.

Effective Discount Calculation

Let's take the example of two successive discounts: 20% and 10%. The formula to calculate the effective discount for these two successive discounts is as follows:

Step Description Calculation 1. Calculate the first discount The first discount is 20% of the original price. Original Price P
P1 P - 0.20P 0.80P 2. Calculate the second discount on the new price The second discount is 10% of the new price (P1). P2 P1 - 0.10P1 0.90P1 0.90 times 0.80P 0.72P 3. Determine the effective discount The final price after both discounts is P2. Effective Discount P - P2 P - 0.72P 0.28P 4. Convert to a percentage Express the effective discount as a percentage. Effective Discount Percentage (0.28P / P) times 100 28%

Therefore, the effective discount on two successive discounts of 20% and 10% is 28%.

Practical Example

Let's consider an example with a price of 100 units:

After the first discount of 20%: 100 - 20% of 100 80 units Second discount of 10% on 80 units: 80 - 10% of 80 72 units Effective discount 100 - 72 28 units

Simpler Method for Calculation

Another way to calculate the effective discount is using the formula for successive discounts:

Effective Discount Percentage ([ (a/100) (b/100 - (a times b)/10000)] times 100

In this case: -20 – 10 -28 (indicating a 28% effective discount)

This method simplifies the calculation by directly applying the successive discounts without needing to calculate the intermediate steps.

General Formula for Successive Discounts

The general formula for successive discounts is:

Effective Discount a b - (a times b)/100

Where, a First discount percentage b Second discount percentage

For example, if the first discount is 20% and the second discount is 10%:

Effective discount 20 10 - (20 times 10) / 100 28%

Conclusion

Understanding the effective discount on successive discounts is essential for ensuring that pricing strategies are accurate and transparent. Using the provided methods, you can easily calculate the effective discount and ensure that your financial transactions are correctly represented.

Keywords: successive discounts, effective discount calculation, percentage discount