Discount
A reduction in price from the original or list price, typically expressed as a percentage or dollar amount.
What You Need to Know
A discount is a price reduction offered by sellers to make products more affordable or incentivize purchases. Discounts can be percentage-based (20% off), fixed amount ($10 off), or conditional (buy one get one free).
Types of Discounts:
- Percentage Discount: Reduces price by a percentage (e.g., 25% off $100 = $75)
- Dollar Amount: Fixed reduction (e.g., $20 off any purchase)
- Tiered Discounts: Different percentages at different thresholds
- Seasonal Sales: Black Friday, holiday clearance, end-of-season
- Volume Discounts: Better pricing for buying in bulk
Stacking Discounts: When multiple discounts apply, they're usually calculated sequentially, not added together. A 20% discount followed by a 10% coupon results in 28% total savings, not 30%.
Example:
- Original price: $100
- 20% off: $100 × 0.80 = $80
- Additional 10% coupon: $80 × 0.90 = $72
- Total savings: $28 (28%), not $30
Psychology of Discounts: Retailers use discounts to create urgency, clear inventory, and attract customers. Understanding true savings helps you make better purchasing decisions.
Sources & References
This information is sourced from authoritative government and academic institutions:
- consumerfinance.gov
https://www.consumerfinance.gov/consumer-tools/money-as-you-grow/
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