How to calculate discount
A discount reduces the original price by a percentage. The formula is straightforward:
sale price = original × (1 − discount/100)
Example
A jacket listed at $120 is on sale for 25% off.
- Discount amount: $120 × 0.25 = $30
- Sale price: $120 − $30 = $90
- With 8% sales tax: $90 × 1.08 = $97.20 out-the-door
Working backwards: when a tag shows only the old and new prices, the discount is (original − sale) ÷ original × 100. A pair of shoes cut from $80 to $60 is $20 ÷ $80 = 25% off. The calculator's Find % tab does this for any two prices.
Markup vs margin explained
Markup and margin both measure profit, but with different denominators. Mixing them up can cost real money in pricing decisions. The margin and markup calculator works out both from a cost and a price.
Markup
markup = (price − cost) ÷ cost
Profit as a % of cost. Used when setting prices: "add 40% to cost."
Margin
margin = (price − cost) ÷ price
Profit as a % of selling price. Used for financial reporting: "we have a 30% margin."
Same $50 profit on a $100 item: 50% markup but only 33% margin. Always clarify which number you mean.
Markup to margin conversion table
| Markup | Equivalent margin |
|---|---|
| 10% | 9.09% |
| 15% | 13.04% |
| 20% | 16.67% |
| 25% | 20.00% |
| 33.33% | 25.00% |
| 50% | 33.33% |
| 67% | 40.12% |
| 75% | 42.86% |
| 100% | 50.00% |
| 150% | 60.00% |
| 200% | 66.67% |
| 300% | 75.00% |
How to calculate tip
In the US, tipping is customary for most service jobs. The standard restaurant tip is 18–20% of the pre-tax bill. Formula:
tip = bill × (tip% / 100)
per person = (bill + tip) ÷ people
Mental math shortcut for 20%: move the decimal one place left, then double. For a $45 bill: 10% = $4.50, so 20% = $9.00. For 15%, halve that: $4.50 + $2.25 = $6.75.
US tipping guide by service
| Service | Standard | Notes |
|---|---|---|
| Restaurant sit-down | 18–20% | Before tax. Round up for great service. |
| Takeout / pickup | 0–10% | Optional. Tip on complex orders or bad weather. |
| Food delivery | 15–20% | Plus any delivery fee (which often doesn't go to the driver). |
| Bartender | $1–2 per drink | Or 15–20% of total tab for table service. |
| Coffee shop / barista | $1 or 10–15% | For specialty drinks or good service. |
| Hair salon / barber | 15–20% | Of the service total. Tip each provider separately. |
| Nail salon / spa | 15–20% | Of the service total. |
| Massage therapist | 15–20% | Not required at medical spas or clinics. |
| Taxi / rideshare | 15–20% | Or $1–2 minimum for short trips. |
| Valet parking | $2–5 | When they bring the car back to you. |
| Hotel housekeeping | $2–5 per night | Daily, left with a note so they know it's for them. |
| Hotel bellhop | $1–2 per bag | $5 minimum for help with luggage. |
| Tour guide | 10–20% | Of the tour cost. Cash preferred. |
Stacking discounts explained
Stacked discounts multiply instead of adding. A "20% off + extra 10% off" promotion is not 30% off, it's 28%.
$100 item with 20% off, then extra 10% off
- After first discount: $100 × 0.80 = $80
- After second discount: $80 × 0.90 = $72
- Effective total discount: 28% (not 30%)
The order of stacked discounts doesn't matter, the final price is the same. Our calculator handles stacking automatically when you enter a second discount percentage.
Frequently asked questions
What is 20% off $50?
20% off $50 is $40. You save $10. Calculation: $50 × 0.20 = $10 discount, and $50 − $10 = $40 sale price. Quick mental math: 20% is one-fifth, so divide $50 by 5 to get $10 off. If sales tax is 8%, your final price is $40 × 1.08 = $43.20.
What is the difference between markup and margin?
Markup is profit as a percentage of the cost, while margin is profit as a percentage of the selling price. Example: buy for $100, sell for $150. Markup = $50 ÷ $100 = 50%. Margin = $50 ÷ $150 = 33.3%. A 50% markup and 33.3% margin describe the same transaction, different denominators. Markup is easier for pricing (add X% to cost); margin is easier for tracking profitability.
How do I calculate markup percentage?
Markup percentage = ((selling price − cost) ÷ cost) × 100. For example, if a product costs you $40 and you sell it for $60: markup = (($60 − $40) ÷ $40) × 100 = 50% markup. To set a price from a target markup: selling price = cost × (1 + markup/100). Retail markups typically range from 50–100%; luxury goods and jewelry often exceed 200%.
How do I calculate tip on a bill?
Multiply the pre-tax bill by your tip percentage as a decimal. For a $50 bill: 18% tip = $50 × 0.18 = $9.00. 20% tip = $10.00. Mental shortcut for 20%: move the decimal one place left ($5) and double it ($10). For a split bill, add bill + tip, then divide by the number of people. Our tip calculator handles this with adjustable tip and split.
Do stacked discounts add up?
No, stacked discounts multiply rather than add. A 20% off coupon combined with an additional 10% off is not 30% off; it's 28% off. Math: $100 × 0.80 × 0.90 = $72, which is a $28 discount (28%). This matters for coupon codes, member discounts, and 'take an extra X% off clearance' sales. Our discount calculator handles stacked discounts correctly so you see the true final price.
What is a good profit margin?
It depends on industry. Software and SaaS: 70–90% gross margin. Retail: 25–50%. Restaurants: 3–15% (net). Grocery: 1–3% (net). A 'good' margin beats your competition and covers fixed costs. For a small retail business, 40%+ gross margin is healthy. Net profit margin (after all expenses) is usually much lower, a 10% net margin is strong for most businesses.
How do I calculate sale price before tax?
The sale price is the post-discount, pre-tax amount. Formula: sale = original × (1 − discount/100). For a $200 item at 30% off: $200 × 0.70 = $140 sale price. Sales tax is then applied to the $140, not the $200. At 8% tax: $140 × 1.08 = $151.20 out-the-door. Most discount signs show the pre-tax sale price; the final amount you pay includes tax on top.
What is 30% markup in margin?
A 30% markup equals a 23.08% margin. Formula: margin = markup ÷ (1 + markup). So 30% markup = 0.30 ÷ 1.30 = 23.08%. The gap between markup and margin grows with higher percentages: 50% markup = 33% margin, 100% markup = 50% margin, 200% markup = 67% margin. Always clarify which one you're discussing, markup and margin look similar but measure different things.
Is tip calculated before or after tax?
Tip should be calculated on the pre-tax subtotal, though many people tip on the post-tax total out of habit. For a $100 meal with 8% tax: pre-tax tip (20%) = $20; post-tax tip (20% on $108) = $21.60. The difference is small, and servers don't generally complain either way. Some POS systems default to suggesting tip on the post-tax amount, check before hitting 20%.