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
Markup vs margin explained
Markup and margin both measure profit, but with different denominators. Mixing them up can cost real money in pricing decisions.
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
How do I calculate percent off?
To calculate a percent off discount, multiply the original price by the discount percentage (as a decimal), then subtract from the original. Formula: sale price = original × (1 − discount/100). For example, 25% off a $80 item: $80 × (1 − 0.25) = $80 × 0.75 = $60. You save $20. Our discount calculator does this instantly and also handles sales tax and stacked coupons.
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 much should I tip at a restaurant?
In the US, standard restaurant tipping is 18–20% of the pre-tax bill for good service. Minimum acceptable is 15%; exceptional service warrants 22–25%. For parties of 6+, many restaurants add an automatic gratuity (usually 18%) — check the bill before adding more. Tip on the pre-tax amount to avoid tipping on tax. Takeout doesn't require a tip, though 10% is appreciated for complex or large orders.
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 split a bill with tip?
Add the tip to the total bill first, then divide by the number of people. For a $120 bill with 20% tip ($24), total is $144. Split 4 ways: $36 each. If one person ordered more, calculate their items + their share of the tip, then split the rest evenly. Apps like Venmo and Splitwise handle complex splits. Our tip calculator shows per-person totals for any split up to 20 people.
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%.