Discounts and Sale Prices: How Retailers Make You Pay More

"40% off" sounds like a great deal. So does "buy one, get one 50% off" and "extra 20% off sale items." But retailers design these offers to feel more generous than they are, and doing the math quickly saves you from purchases you'd regret. Here's how to see through the common tactics.

The basic formula

If something is X% off, you pay (100 − X)% of the original price. A 30% discount means paying 70%. Multiply the original price by 0.7 and you're done. A $79 item at 30% off costs $79 × 0.7 = $55.30.

Stacked discounts don't add

The trick most people fall for: "40% off, then an extra 20% off at checkout." That's not 60% off. It's 0.6 × 0.8 = 0.48, so 52% off. The second discount applies to the already-reduced price, not the original. Always multiply the "pay" fractions: 0.6 × 0.8 = 0.48.

Retailers know this feels less exciting than "60% off," which is why they word it as separate percentage points rather than the combined number.

"Buy one, get one 50% off"

This one is sneakier than it looks. If two items cost $40 each, you pay $40 + $20 = $60 for $80 worth. That's a 25% discount overall — not the 50% the sign implies. The 50% only applies to the second item, and only if you actually wanted two.

If you only needed one, the "deal" cost you $20 extra. BOGO offers work when you genuinely want both items; otherwise they're a way to make you spend more than you planned.

Percentage vs. dollar-off

"$20 off" and "20% off" are not the same. On a $50 item, 20% off saves you $10 — less than the $20 offer. On a $200 item, 20% off saves $40 — more. When a store offers a percentage discount, calculate the dollar amount. When it offers a dollar discount, calculate the percentage. The answer tells you which is actually better.

"Was" prices and anchor pricing

Retailers sometimes inflate the "original" price to make the discount look larger. A jacket listed at "$200, now $120" is advertised as 40% off — but if it was really only ever worth $130, the real discount is closer to 8%. This is called anchor pricing, and it's legal in most jurisdictions as long as the "original" price was genuinely charged at some point.

A quick check: has the item been at the "original" price recently, or does it seem perpetually on sale? Perpetual sales are usually just the real price with a discount label.

Sales tax matters too

That 40% off looks less appealing once 8% tax is added back. A $100 item at 40% off is $60; with 8% tax, it's $64.80 — effectively a 35.2% discount, not 40%. This doesn't change whether you should buy, but it's worth knowing when comparing an online purchase from a tax-free state to a local store.

A discount calculator handles all these combinations at once: stacked percentages, tax, and the actual savings. Worth keeping bookmarked for Black Friday.