Basically, discounts are something that consumers desire when it comes to purchasing goods or services. From here, you can understand that discounts will be a promising business strategy to attract customers' buying interest. Then, how to calculate the discount?
You need to remember that setting a discount promo will be a way of bringing profits to the business if it is managed in the right way and calculated with the right formula.
Before moving on to a discussion regarding discount calculation, it never hurts to understand what a discount is and its types. For more details, please read the review of this article carefully and to the end.
Definition of Discount
In a sense, a discount is a reduction in the recorded price imposed by the seller to the consumer who wants to buy a product.
It is undeniable, this price reduction is a powerful attraction to attract consumers' buying interest in the goods and services that sellers offer. How come? Prospective consumers will be able to have goods at a lower price than the usual price.
In addition to price reductions, the definition of discount also has various other meanings based on the opinion of experts. Before crawling into the discussion of how to calculate discounts, here are the definitions of discounts according to experts' opinions, which are as follows:
1. According to Kotler
The definition of discount according to Kotler is an adjustment of the basic price in order to give an award to the customer. In other words, the business owner will give a 'reaction' in the form of a special price offer to customers who carry out certain purchasing activities.
For example, paying bills early, buying goods in bulk, and so on.
2. According to Tjiptono
Furthermore, Tjiptono's opinion regarding the definition of discount is giving a discount to the buyer as a form of appreciation because a customer has carried out certain purchasing activities that are considered profitable for the seller.
In other words, customers will benefit after providing benefits to the seller through purchasing activities. For example, ordering goods in a certain amount, inviting others to use a service, and other similar examples.
3. According to Suhardi Sigit
The main meaning of the notion of discount according to Suhardi Sigit may be almost the same as the previous definitions. According to him, discounts are price reductions that have been set for certain customers who are able to meet all certain requirements that have been set by the seller.
In other words, buyers will get a discount if they meet certain purchase conditions imposed by the business owner. For example, buy 3 get 1 free promo, spend a minimum of IDR 200 thousand to get a special bonus, purchase a bundling package, and so on.
Various Forms of Discount
In general, the meaning of discount is not only about reducing the normal price so that the finished product is cheaper. Discounts themselves have been divided into various types whose purpose is to increase consumer buying interest and increase business profits.
If we think at first glance, setting a discount might look detrimental on the seller's side because it can reduce the range of profits that business owners will get. However, this is not true if the seller is able to understand his business well and knows how to calculate discounts correctly.
In addition, the determination of discount promos will encourage consumers to make purchases in large quantities and become a promotional event for free word of mouth.
Furthermore, here are the kinds of discounts that you often encounter, which are as follows:
1. Discounts Discounts
In general, most people recognize a discount as a discount promo provided by the seller. In fact, rebates are one of many types of discounts among other types of discounts.
As the name implies, this type of discount is a discount on a certain product or service. Generally, the seller will apply a discount of a certain amount of rupiah for all or several types of products in certain categories.
In addition, the seller will set this discount with varying values for each product they offer.
2. Buy One Get One Discount
It seems that most of us are familiar with the buy one get one (BOGO) discount type or buy one get one free. This type of discount is fairly often applied by many sellers in almost all areas of business.
Through this discount, buyers only need to pay the price of one product and then get two types of products at once. Generally, this type of product that is given away for free has a value below or equal to the value of the main product that the seller offers.
For sellers, the main purpose of applying this type of BOGO discount is to reduce the amount of product stock in the warehouse. If you are curious about how to calculate the BOGO discount, make sure you read this article review thoroughly to find the answer.
3. Discount in Percent
If you pay close attention, many business fields have set special discount promos in the form of percent or percentages.
In general, the implementation of this type of discount is carried out by retail stores and other business people by applying certain conditions or criteria to potential buyers.
For example, the application of discounts for customers who are members of loyalty members, a 50% discount for every purchase of a certain quantity of goods, a 25% discount during the holidays, and many other examples.
Even so, there are still some sellers who also apply a discount in percent without setting any conditions.
Basically, this percent discount is quite effective in persuading consumers to buy certain products. Especially if the discount percentage is written in large numbers.
But for consumers, this type of discount is quite tricky and confusing. It is possible that the discount is not as big as consumers think and it is also necessary to calculate the discount carefully. For that, consumers need to know how to calculate the percent discount before buying the product.
Formulas for Calculating Discounts and Examples
For the seller, you need to set a discount promo appropriately and carefully according to your abilities and business at that time. Although the goal is to attract consumer buying interest, you also have to pay attention to the right amount of discount so as not to cause potential losses.
And as a buyer, you also need to deal with discounts wisely and carefully so as not to be fooled by the large amount of discounts that have the potential to make your wallet empty quickly.
For that, it is important for you to know how to calculate the discount regardless of the type of discount. Here's how to calculate product discounts that you need to understand, including:
1. How to Calculate Percent Discount
Basically, the type of discount in percent does require a fairly complicated calculation process than other types of discounts.
However, if you can understand the method and concept of calculating it, then you will get used to calculating the actual product price after deducting the discount percentage listed.
To know how to calculate a percent discount, you need to use the following basic formula,
Price after discount = Product price – ( % discount x product price)
For example, if you want to buy clothing products at a normal price of Rp. 200,000 with a discount of 20%, then the price of clothes you have to pay:
IDR 200,000 – (20% x IDR 200,000)
= IDR 200,000 – IDR 40,000
= IDR 160,000
So, you only need to pay the price of the clothes of IDR 160,000.
2. How to Calculate the Percent Discount …% + …%
One type of discount that is effective in attracting consumer buying interest is the type of additional discount. In general, this type of discount is in the form of adding a certain percentage of the discount to the initial discount percentage. For example, an additional product discount of 50% + 20%.
Even though it looks like an ordinary sum, the method of calculating the additional discount above is not the same as adding up 50+20 = 70%.
The exact way, you need to subtract the normal price of the product with the main discount, which is 50%. Then, you calculate the results of the calculation again with an additional discount of 20%.
Or, you can use the method of calculating additional discount prices using the following formula,
Main Discount = % main discount x product price
Then, followed by the formula,
Additional Discount = % additional discount x Main Discount
After that, the calculation still continues with the formula,
Actual Price = Product Price – (Main Discount + Additional Discount)
For example, you want to buy shoes for IDR 300,000 with a 50% + 20% discount promo. Based on the amount of the discount, the actual price you need to pay for purchasing the shoe product is,
First Discount = 50% x IDR 300,000
= IDR 150,000
Then, the results of the first discount calculation are continued with additional discount calculations as follows,
Additional Discount = 20% x Rp150.000
= IDR 30,000
Actual price = IDR 300,000 – (IDR 150,000 + IDR 30,000)
= IDR 300,000 – IDR 180,000
So, the buyer will get a total discount of IDR 180,000, so the total price that the buyer needs to pay is IDR 120,000
3. How to Calculate Buy One Get One Discount
If you are a consumer, are you often captivated by special discount promos for Buy One Get One or BOGO? If so, there's nothing wrong with you needing to understand the concept and how to calculate this type of discount.
In the previous discussion, you have learned that products with the BOGO discount system will provide one additional product for free where the value of the additional product is below the main product or even equivalent.
In other words, if the additional product has the same value as the main product, the BOGO discount setting is not much different from the half-price discount system or a 50% discount.
Thus, the calculation of the discount will be the same as calculating the percent discount as described in the previous review.
For example, a seller puts up a buy one get one free promo for a bag product for Rp. 200,000. That is, the buyer will get two bag products only by paying a selling price of Rp. 200 thousand.
If the two bag products have the same value, it means that each bag product is priced at half the price using calculations,
IDR 200,000 : 2 = IDR 100,000
IDR 200,000 – (50% x IDR 200,000)
= IDR 200,000 – IDR 100,000
= IDR 100,000
So, the price of the bag product is Rp. 100,000 per one bag.
That's how to calculate product discounts along with formulas and examples. Before you set a discount or before buying a discounted product, don't forget to do the right discount calculation method to get the most profit. Ready to try?