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 between marked price and the 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 a 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 the 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 to 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 increase 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.

A discount is a percentage of the market price.


Discount rate (DR) = p×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:

Ricky purchased a shirt for $2000. The discount offered for the shirt is 10%. Find how many dollars has he given to the cashier?


Here, Principal amount p = 2000 dollars

Interest rate r = 10%

Discount rate, DR = p×r

DR = 2000×10% = 200

The discount amount for the dress is 200.

Discount rate, DR = 200.

Dress rate = Principal amount – Discount rate

= 2000 – 200 = 1800

Ricky has given $1800 to the cashier.

Question 2:

Kavita bought land for 50000 dollars in the year 2000. She sold the land by offering a 30% discount on the land in the year 2004. Find how many dollars did she lose?


Principal amount p = 50000 dollars

Interest rate, r = 30%

Discount rate DR = p×r

Discount rate DR = 50000×(30/100) in the year 2004

Discount rate =15000 dollars.

Thus, Selling price = $50000 – $15000 = $35000

Hence, Kavitha lost 15000 dollars.

Quiz on Discount Rate