A basic sale price calculator tells you what a listed discount saves. What it does not show is how discounts combine, how sales tax changes the final number, and when a bigger-percentage sale is actually worse than a smaller one. This section covers the scenarios a simple discount calculator cannot.
Stacked Discounts Multiply, They Do Not Add
The single most common shopping math mistake is adding two discount percentages together. A 30% sale with an extra 20% off coupon is not 50% off. Each discount applies to whatever price remains after the previous one. On a $100 item:
Step 1: 30% off → $100 × 0.70 = $70.00
Step 2: 20% off → $70 × 0.80 = $56.00
Combined discount = (100 − 56) ÷ 100 = 44% off
Not 50% off.
The combined "keep rate" is (1 − 0.30) × (1 − 0.20) = 0.56. You pay 56%, so you save 44%. This is how nearly every retailer structures stacked sale events, so the advertised combined discount is almost always smaller than the two numbers added together.
Sales Tax: The Discount Usually Comes First
In almost all US jurisdictions, sales tax is charged on the discounted price, not the original price. This is good for the shopper. A $100 item at 25% off in a state with 8% sales tax:
Original $100.00
After 25% off $75.00
Plus 8% sales tax ($75 × 0.08) $6.00
───────────────────────────────────────
Final at register $81.00
Manufacturer coupons are treated the same way in most states, but store coupons and percent-off promotions are almost always pre-tax discounts. A few states (Alabama, Georgia, Illinois, Kansas, Missouri) tax manufacturer coupons differently, so the final price may include tax on the un-discounted amount for those coupons.
When a Higher Percentage Is Not a Better Deal
A "60% off" clearance sticker can lose to a "20% off" coupon, depending on what the starting price is. This happens because stores frequently raise the list price right before a sale so the percentage looks dramatic. Always compare the final dollar price, not the percentage.
| Item | Sticker | Starting Price | Discount | Final Price |
|---|
| Same sweater (Store A) | 60% off | $120 | 60% | $48.00 |
| Same sweater (Store B) | 20% off | $55 | 20% | $44.00 |
| Same sweater (Store C) | No sale | $45 | 0% | $45.00 |
Store A looks like the best deal by percentage, but Store B is $4 cheaper and Store C beats it without any sale at all. Check the competitor price before assuming the biggest "% off" is the winner.
BOGO, BOGOHO, and Discount Equivalence
Common "buy one get one" promotions each equal a different percent off, if you buy the number of items required:
| Promotion | Equivalent Discount | Required Purchase |
|---|
| Buy one get one free (BOGO) | 50% off | Must buy 2 |
| Buy one get one 50% off | 25% off | Must buy 2 |
| Buy two get one free | 33% off | Must buy 3 |
| Buy three get one free | 25% off | Must buy 4 |
| Buy one get one 25% off | 12.5% off | Must buy 2 |
These equivalents assume all items are the same price. If the discount applies to the lower-priced item, your savings drop. Always check the fine print on which item the free or discounted one is.
Markdown vs Discount: Terminology That Matters
Retailers use two different terms that look similar but describe different calculations. A markdown is a permanent reduction in the list price, used when inventory is not moving. A discount (or sale) is a temporary percentage off the current list price. Clearance items are usually marked down once, then discounted on top of the new markdown as they get closer to the end of the season. If you see a price tag showing two crossed-out numbers, the bottom one is the markdown, and any "additional X% off" sign at the register is a further discount applied to that markdown.