How To Handle Percents In Product Prices

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So you receive an email in which a friend of yours is saying:

“Hey, I’ve been thinking some more about that offer of promoting my product on your site at a discounted price for a period of time. But if I make the discount 61% off the regular price as we agreed, then give you 30% commissions and give the e-Commerce 10%, all I am left with is -1% loss per sale, right?”

An answer quickly popped into my mind: “No, because you should set the discount to 60%”. Based on my friend’s algorithm, at 60% discount off the regular price, he would be left with 0% per sale so the situation is still funny. But that algorithm isn’t right, is it? It is perhaps the first thing when it comes to mind on handling percents: just keep subtracting every percent from 100%.

Suppose the product in question would have a value of $100 (this would be the regular price). One way of correctly thinking about it would be like this: so there is a 61% discount off the regular price. This means that the customer would still have to pay 39% from the regular price and this would be $39. Next we have the issue of how to interpret the 30% commission and the 10% fee the e-Commerce is taking away.

Right after the sale has been made, the e-Commerce takes 10% from the money generated from the sale which means it actually takes 3.9 (10% out of $39). This leaves us with $39-$3.9 = $35.1. Next, the commissions are taken from this sum of $35.1 so this happens after any discount and after any e-Commerce fees. This means that the commission is 30% out of $35.1 which gives $10.53. Naturally that my friend would be left with the difference from $10.53 to $35.1 which is $24.57 so not with -1% as he first thought or even 0% as I originally suggested as a joke.

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