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Effective discount rate
Recovers the rate from the two prices alone, which is how you compare a discount quoted in currency against one quoted in per cent.
The Formula
rate = (original - sale) / original
Recovers the rate from the two prices alone, which is how you compare a discount quoted in currency against one quoted in per cent.
| Symbol | Meaning | Unit | Notes |
|---|---|---|---|
| original | Pre-tax price before the discount | currency | 120 in the worked example. |
| sale | Price actually paid before tax | currency | 90.0 in the worked example. |
| rate | Effective discount rate | dimensionless | 30.0 / 120 = 0.25, which is 25 per cent. |
What Each Symbol Means
originalcurrency
Pre-tax price before the discount
120 in the worked example.
salecurrency
Price actually paid before tax
90.0 in the worked example.
ratedimensionless
Effective discount rate
30.0 / 120 = 0.25, which is 25 per cent.
See It Worked With Real Numbers
A formula on its own does not tell you which number goes where. The how to calculate a discount page applies this equation to a concrete case, shows every intermediate step, and names the mistakes that produce a wrong answer even when the algebra is right.
Where This Formula Appears
This equation is the working core of How To Calculate A Discount, filed under Everyday Life. Every number the guide produces comes from substituting into this one line.