In this post, I will discuss the difference between a single trade discount and a discount series. A discount is either expressed as a single percentage of the total price or a series of discount percentages such that each successive discount is computed as a percentage of the net price after evaluating previous individual discounts in the series. Consider a single discount of 40% on a product. This means that a product with a selling price of $100 will be sold at $60 after deducting this discount.
Contrast this with a discount series of 20%, 10% and another 10%. A product having a price of $100 after deducting the first discount of 20% in the series will be $80 since the discount is $20. This second discount in the series, 10% on $80 when computed is $8 and will reduce the net price to $72. Finally, applying the last discount of 10% on $72 which is $7.2 brings our final net price to $64.8. Therefore, total discount is 35.2%. This series is essentially used by companies to make customers feel that they have received more discount than they actually could have under a single discount.
An example of a fractional rate is 11 2/5%. Multiply the whole number by the denominator of the fraction such as 11 by 5 to get 55.Then add this to the numerator such as 55 to 2 giving 57. This then gives the improper fraction 57/5% which if computed gives 11.4%. In order to convert this into a decimal equivalent, divide 11.4/100 to give 0.114. (Shell, 2009) (Business Plans that Raise Capital, 2004)
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