Percentages Without Mistakes: Discounts, Markups, and Percent of an Amount
Percentages seem like grade-school material — until they meet money. "30% off," "a 25% markup," "a 40% margin" — each term has its own calculation base, and mixing them up regularly costs business owners real money. Let's lay out the three most common calculations.
The three calculations you need most
- percent of a number: 18% of 12,000 = 12,000 × 0.18 = 2,160 (how VAT and fees are computed);
- a number plus a percent: 2,500 + 20% = 2,500 × 1.20 = 3,000 (markup on top);
- what percent one number is of another: 300 out of 1,500 = 300 ÷ 1,500 × 100 = 20% (an item's share of revenue).
A discount uses the first scheme, but "in reverse": minus 30% off a price of 2,500 is 2,500 − 750 = 1,750. You can check all three variants quickly in the percentage calculator: it works in both directions and never mixes up the base.
A discount and a markup are different percentages
The most expensive mix-up in retail. Markup is calculated from cost: you buy for 800, add a 25% markup, and sell for 1,000. Margin is calculated from the selling price: a profit of 200 on a price of 1,000 is a 20% margin. So a "25% markup" and a "25% margin" are two different prices. If one side of a negotiation talks markup and the other talks margin, the difference in money will be substantial.
Why two discounts aren't minus thirty
Discounts don't add up, because the second one is taken from the already-reduced price. Minus 20% and then another minus 10% looks like 2,500 → 2,000 → 1,800 — a total discount of 28%, not 30%. For stores, by the way, a "20% + 10%" sign looks more generous than an honest "28%" — now you know why.