Discounts, margin and markup: how to price and how to compare offers

A sale sign says "20% off, plus an extra 10% with your card". A shop owner buys a bag of goods for ₹600 and wonders what to charge. Both are percentage problems, and both are easy to get wrong in ways that cost real money: the shopper thinks they saved 30% and saved 28%, the seller adds 30% to the cost and believes they earn a 30% margin. The free Discount & Profit Margin Calculator handles both sides. Choose Discount if you are buying, or Margin and markup if you are selling. This guide explains the rules behind each result.

For shoppers: discounts

A single discount is simple: the final price is the original price times (1 − discount ÷ 100). A ₹1,000 item at 30% off costs 1,000 × 0.7 = ₹700, and you save ₹300.

Discounts do not add up

When there are two discounts, the second applies to the already-reduced price, not to the original. 20% off, then another 10% off, means you pay 0.8 × 0.9 = 0.72 of the price. That is a total discount of 28%, not 30%.

On a ₹2,499 item:

• After 20% off: 2,499 × 0.8 = ₹1,999.20
• After a further 10% off: 1,999.20 × 0.9 = ₹1,799.28
• You save ₹699.72, which is 28% of the original.

The tool does this for you: enter the price and the discount, then the extra discount (such as a bank offer or coupon). It shows the final price, how much you save and the effective discount.

The order does not change the result (0.8 × 0.9 equals 0.9 × 0.8), but the more discounts you stack, the more the total falls short of the sum. Three successive discounts of 10% give 0.9 × 0.9 × 0.9 = 0.729, so ₹5,000 becomes ₹3,645, which is 27.1% off, not 30%.

Comparing offers

"Flat 30% off" and "20% off plus 10% off" are not the same. The first gives 30%, the second 28%. A "buy one get one free" deal on a ₹500 item is 50% off per item. A "₹300 off on ₹1,000" is 30%. Convert every offer to an effective percentage or a final price before you decide. Also check what the discount applies to: some stores apply it only to the base price, not to delivery or tax, and some card offers have a maximum saving that makes a large percentage meaningless on an expensive item.

For sellers: margin and markup

Now the other direction. You buy an item for ₹600 (your cost) and sell it for ₹800 (your price). Your profit is ₹200. Two percentages describe it, and people confuse them all the time:

• Margin is profit as a share of the selling price: 200 ÷ 800 = 25%.
• Markup is profit as a share of the cost: 200 ÷ 600 = 33.33%.

They describe the same profit but always give different numbers (markup is always larger than margin when profit is positive). Mixing them up leads to underpricing. A shopkeeper who "adds 30% to the cost" has a markup of 30% but a margin of only 23%. A shopkeeper who wants a 30% margin cannot reach it by adding 30%.

Cost	Price	Profit	Margin	Markup
₹600	₹800	₹200	25%	33.33%
₹80	₹100	₹20	20%	25%
₹600	₹857.14	₹257.14	30%	42.86%

Pricing for a target margin

To reach a margin you want, divide the cost by (1 − margin ÷ 100):

Price = Cost ÷ (1 − margin ÷ 100)

For a 30% margin on a ₹600 cost: 600 ÷ 0.7 = ₹857.14. Not ₹780 (600 plus 30%). The tool has a field for the target margin and shows the price you need. To check it, the profit is 857.14 − 600 = 257.14, and 257.14 ÷ 857.14 is exactly 30%.

If you prefer to think in markup, the multiplier is simple: price = cost × (1 + markup ÷ 100). A markup of 42.86% is the same pricing as a 30% margin.

Costs the simple formula leaves out

The calculator uses the numbers you give it. The margin it shows is only as honest as the cost you enter. A real cost includes more than the purchase price:

• Transport, packaging and storage.
• Payment fees and returns.
• Your time and overhead: rent, electricity, wages, software.
• Discounts you give away, which come directly out of margin. If your 30% margin product is sold at 10% off, your margin drops to about 22%.
• Tax. GST collected is not your income. Work out margin using prices without GST. If a price includes GST, remove it first with the GST Calculator, as described in the GST guide.

A product with a margin that looks healthy before costs can lose money after them. Include everything, then check.

What is a good margin?

There is no single answer. It depends on the industry, the volume and your overheads. Grocery and food retail often run on thin margins and make money through volume; software and services usually need high margins because the work is mostly time. Compare with similar businesses and ask whether the margin covers your total costs and leaves a profit you are happy with. A low margin on high volume and a high margin on low volume can earn the same.

Using the calculator

To check a discount:

1. Open the Discount & Profit Margin Calculator and choose Discount.
2. Enter the price and the discount, and any extra discount.
3. Read the final price, the amount saved and the effective percentage off.

To work out margin:

1. Choose Margin and markup.
2. Enter your cost and your selling price to see profit, margin and markup, or enter a cost and a target margin to see the price you need.

A discount can be anywhere from 0 to 100%. All calculations run in your browser and nothing is stored.

Everyday uses

• Comparing two shops' offers on the same product.
• Checking that "up to 70% off" is real by working out the price per item.
• Setting prices for a small shop, a market stall or an online store.
• Quoting a service with a margin built in.
• Planning a sale: how deep a discount can you afford before the margin vanishes? A 20% discount on a product with a 25% margin leaves roughly 6% (price 0.8, cost 0.75).
• Teaching percentages with real examples; the Percentage Calculator covers the basic formulas and the percentage guide explains why changes are not symmetrical.

Common mistakes

• Adding discounts instead of multiplying.
• Adding a percentage to cost and calling it margin.
• Ignoring costs beyond the purchase price.
• Including GST in the profit.
• Discounting without checking the new margin.
• Comparing a margin on one product with a markup on another.

Related tools

If the price you pay is inclusive of GST, remove it first with the GST Calculator. Write the final amount in words for an invoice with the Number to Words Converter. To finance a purchase, see what it will cost with the EMI Calculator.

Quick answers

Do two discounts add up? No. The second is taken from the reduced price. 20% then 10% is 28%.

What is the difference between margin and markup? Margin is profit divided by the selling price. Markup is profit divided by the cost.

How do I price for a 30% margin? Divide the cost by 0.7.

Is GST part of my margin? No. Work out margin on prices without GST.

Can a discount be more than 100%? No. The calculator accepts 0 to 100%.