To determine the type of discount or increase a price represents, you need to calculate the percentage of cost reduction. It is a simple operation to perform and does not require advanced algebraic skills. You can perform the necessary operations using a calculation program such as Microsoft Excel, but you can also perform them freely by hand. You will need to know the current price data, the discounted price and the starting price.
Steps
Method 1 of 2: Calculate the Cost Reduction Percentage by Hand
Step 1. Determine the starting price of the product or service
For most purchases, this figure represents the retail price before any coupons or discounts are applied.
- For example, if the original retail price of a sweatshirt is € 50, use that as the starting price.
- To calculate an hourly service, multiply the standard billing rate by the number of hours normally billed.
Step 2. Determine the new price for the product or service
This is the price obtained after applying sales promotions, discounts and coupons.
For example, if you paid € 40 for a sweatshirt after applying the various discounts, the new price will be € 40
Step 3. Determine the price difference
To get this value, subtract the new price from the starting price.
In this example, the price difference is the starting price of € 50 minus € 40, or € 10
Step 4. Divide the price difference by the starting price
In this example we will divide € 10 by the initial € 50, thus obtaining 0, 2.
Step 5. To convert the decimal to a percentage, multiply the digit by 100 (or shift the decimal point two digits to the right)
In this example we will multiply 0, 2 by 100, thus obtaining 20%. This means that you have saved 20% on the purchase of the sweatshirt.
Method 2 of 2: Calculate the Cost Reduction Percentage with Microsoft Excel
Step 1. Type the starting price of the product or service in cell A1 and press enter
For example, if a computer's starting price was $ 200, type "200" in cell A1.
Step 2. Type the final price obtained after applying the discounts in cell B1 and press enter
For example, if you paid $ 150 for a computer, type "150" in cell B1.
Step 3. Type the formula "= A1-B1" in cell C1 and hit enter
At this point, Excel will automatically calculate the difference between the two prices and show the numeric value in the cell.
In this example, if you enter the formula correctly, the numeric value in cell C1 will be $ 50
Step 4. Type the formula "= C1 / A1" in cell D1 and hit enter
Once this is done, Excel will divide the price difference by the starting price.
In this example, entering the formula correctly will result in the numeric value in cell D1 being 0.25
Step 5. Select cell D1 with the cursor and click "CTRL + SHIFT +%"
Once done, Excel will convert the decimal to a percentage value.
In this example, the value in cell E1 will be 25%. This means that you have saved 25% on the purchase of the computer
Step 6. Enter new values in cells A1 and B1 to calculate the percentage savings on the cost of other purchases
Since you've entered formulas in the other cells, Excel will automatically update the cost savings percentage when you change the starting price, ending price, or both.
