Discount Rate


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Discount Rate

Discount Rate is the price of the total quantity/amount usually less than its original value. We can also say, a total bill is usually sold at a discount. Based on the profit and loss concept, the discount is basically the difference of marked price and selling price.

Marked price is the cost set by the seller as per the market standard and selling price is the price at which the product or commodity has been sold. When the selling price is less than the marked price, then the buyer has said to be got some discount on it.

What is Discount Rate?

The discount rate is the annualized percentage of the above discount, which is a percentage adjusted, to give an annual percentage.

The reduction in the rate/price of some item/product or service is referred to as Discount rate. It is usually printed on the item by making some modifications in the marked price(Distribution Channel) or by pasting a sticker on the commodity(by making changes in retail prices) or making changes in list price set for buyers.

The discount is provided for the purpose of:

  • increasing sales
  • To clear out old stock
  • To encourage distributors
  • To reward potential customers etc.

So, the discount can act as a strategy to attract customers for a particular product or service.

It is one of the easiest ways to increase the demand for any product. It plays an important role in online merchandising plans. In Math, Discount problems can be solved using Discount Formulas. It helps to increases sales.

Discount Rate Formula

Discount = Marked price – Selling price

Where, M.P(Marked Price) is the actual price of the product without discount.

S.P(Selling Price) is what customers pay for the product.

Discount is a percentage of the marked price.


Discount rate (DR) = p x r

Where, p = principal amount

r = interest rate

How to Calculate Discount Rate?

To calculate the discount rate of any product, we need to know the marked price and selling price of the product. Use the formula mentioned above to understand the concept.

Also find the solved example questions given below to get an easy approach to the concept.

Discount Rate Example Problems

Let’s learn how to find the discount with the help of examples.

Question 1: Ruby purchased the shirt. That shirt rate was $2000 at a 10% discount. Find a discount rate? And then Ruby how many dollars give to the cashier?

Solution:Here,Principal amount p = 2000 dollars

Interest rate r = 10%

Discount rate DR = pr

DR = 2000* 10% = 200

The discount amount for the dress is 200.

Discount rate DR = 200.

Dress rate = principal amount – discount rate

= 1000 – 200 =800

Ricky 800 dollars is given to the cashier.

Question 2: Kavita bought land for 50000 dollars at 20% in the year 2000. Then 2004th year that land was sold for 3000 dollars. How many dollars did she lose?

  • Solution: Principal amount p = 50000 dollars
  • Interest rate r = 20%(I)
  • Discount rate DR = pr = DR = 50000 x 20/100 = 20100 in the year 2000 = 10000
  • Discount rate DR = 1000 dollars in the year 2000.
  • So, the discount amount is 10000 dollars.
  • Discount rate DR = 50000*30/100 in 2004th year
  • Discount rate =15000 dollars.
  • The discount amount is 15000 dollars.
  • Loss Discount rate in 2004th year – the Discount rate in the year 2000

=15000 dollars – 10000 dollars

=5000 dollars

Kavita lost 5000 dollars in that land.