How to Calculate Sale Prices

Do you know how to calculate sale prices? It's easy once you know the right formulas. Calculating sale prices simply relies on a very basic understanding of math. Just knowing how to add, subtract, multiply and divide is enough to help you figure out how much an item will cost on sale, and how much cheaper it is than its regular price. With a few easy-to-remember formulas, you'll know how to calculate sale prices.

The most important component in understanding how to calculate sale prices is understanding percentages. Many of us draw a blank when we try to figure out how much of a discount a 15% off sale is worth. The easiest way to get around this Is just dividing by 10:

If the original price of a toaster is $30.00, 10% off would be $3.00 off since dividing 30 by 10 equals 3. Once you know what 10% of a price is, you can easily figure out what 5% of a price is too. If $3.00 is equal to 10%, then half of that (or $1.50) is equal to 5%. When you add the 10% value and the 5% value, you have the total sale discount of 15%, for a total of $4.50. You then subtract the discounted amount from the toaster's original price to figure out its price on sale. If the toaster's regular price is $30 and a 15% off sale reduces its price by $4.50, the item costs $25.50 on sale.

Since most sales are based on multiples of 10 (20%, 50%, etc.), they're even easier to figure out. A simple way to divide out a typical sale discount percentage in your head is to remove the last number from the price, or just move the decimal point one place to the left. Looking at the $30.00 toaster again, if it were on sale for 20% off instead of 15%, the formula to figure out the discounted price is a little different. If you move the decimal point in $30.00 one space to the left, you get $3.000. This is the same as $3.00, which we already figured out equals 10% of $30.00. Multiplying that 10% (or $3.00) by 2 gets us to 20%, for a total of $6.00. Reducing 20% from the $30.00 original price means the toaster costs $24.00 on sale.

Knowing how to calculate sale prices on expensive items is even more important, since the percentages are worth more significant amounts of money. Calculating sale prices may seem confusing with larger numbers, but the formula stays exactly the same. If you wanted to purchase a computer that cost $800, and could take your pick between a $100 rebate or a 15% off sale, which would you choose? Applying the same formula as we used with the $30 item, you could quickly figure out which option would give you the cheapest price. If 10% of the computer's $800 purchase price is $80, 5% of the price is $40. Adding those percentages means that the 15% off sale would result in a discount of $120, making it a more valuable discount option than the rebate.

Learning how to calculate sale prices can also help you calculate sales tax. This can seem confusing since sales tax percentages are usually based on a single digit number, but it's simple to calculate once you know how. If you live in a state with 7% sales tax, that's 7 cents for every dollar spent. Using the example of the $30.00 toaster on sale at 20% off (or $24.00), the sales tax can easily be estimated before you make it to the cash register. You'll need to take the amount of sales tax per dollar (7 cents, or $.07), and multiply that number by the number of total dollars in the price ($24.00). Splitting the dollar amount up by tens makes calculating sales tax simple. Figuring out that $.07 multiplied by $10 is 70 cents, or $.70 gets you halfway there. Since 10 divides into $24.00 2 times, you'd multiply the $10.00 value by 2, for a total tax of $1.40. This still leaves the remainder of $4.00. Multiplying $4.00 by $.07 equals $.28. Simply add the remainder value to the tens value for a total sales tax of $1.68. Add the total sales tax to the price of the item to estimate the total price. On your $24.00 toaster, the total price should come to about $25.68.

Calculating sales tax also becomes more important with expensive items, since the amount can really drive up the price at the cash register. Let's go back to the example of the $800 computer on sale at 15% off (or $680). Calculating the sales tax for an item this expensive might seem more difficult, but uses the same basic formula as the cheaper equation. Since the computer costs more than $100, it's easier to calculate sales tax by each hundred dollars first. With $.07 sales tax charged on each dollar, the sales tax equals $7.00 per $100. Since the computer costs $680 that number is multiplied by 6, the number of hundreds $100 divides into evenly. This brings the sales tax tally to $42.00. Since the remainder ($80.00) is less than $100, that can be split into $10 increments. Since we know there is a sales tax of $.70 on each $10 spent, that number can be multiplied by 8 (the number of $10 increments in the remainder). This adds another $5.60 in sales tax, bringing the total sales tax total to $47.60. This gives you an estimated total at the cash register of $727.60. Without calculating sales tax first, that nearly $50 jump in price could have caused some serious sticker shock.

Next time you're out grocery shopping, try comparison pricing between a brand name product on sale and a less expensive brand of the same product at its regular price. Sometimes the generic brand products at regular price are even cheaper than equal-quality brand name items on sale. From the grocery store to purchasing a home, knowing how to calculate sale prices, sales tax and discounts will help you save significant money.