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To determine what discount or increase a price represents, you need to calculate the cost savings percentage. This basic calculation doesn't require advanced algebra or calculus skills. You can set up the calculation in a spreadsheet program like Microsoft Excel but you can also calculate cost savings by hand. You will need to know both the current, discounted price and the original price.

Method 1
Method 1 of 2:

Calculating Cost Savings By Hand

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  1. For most purchases, this is the retail price before any coupons or discounts are applied.[1]
    • For example, if the original, retail price of a sweater is $50, use $50 as your original price.
    • For an hourly service, multiply the standard billing rate by the number of hours normally billed.
  2. This is the price after any sales promotions, discounts, coupons, or deals that you received on it.[2]
    • For example, if you ultimately paid $40 for the sweater after all discounts, the new price is $40.
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  3. To do this, subtract the new price from the original price.[3]
    • In this example, the price difference is the original price of $50 minus $40, or $10.
  4. In this example, that’s $10 divided by the original $50 price tag, or 0.2.
  5. In this example, that’s 0.2 multiplied by 100, or 20 percent. This means you saved 20 percent on the purchase of the sweater. [4]
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Method 2
Method 2 of 2:

Calculating Cost Savings in Microsoft Excel

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  1. For example, if the original price of a computer was $200, type “200” in cell A1.
  2. For example, if you ultimately paid $150 for the computer, type “150” in cell B1.
  3. When you do this, Excel automatically calculates the difference between the two prices and displays the numerical value in the cell.
    • For this example, the numerical value in cell C1 should be 50 if you enter the formula correctly.
  4. When you do this, Excel divides the price difference by the original price.[5]
    • For this example, the numerical value in cell D1 should be 0.25 if you enter the formula correctly.
  5. When you do this, Excel converts the decimal into a percentage. [6]
    • In this example, the value in cell D1 should be 25%. This means that you saved 25 percent on the purchase of the computer.
  6. Because you entered formulas into the other cells, Excel will automatically update the cost savings percentage when you change the original price or the final price, or both.[7]
    • For example, say you also purchased a lamp for $10 that originally cost $17. If you type “17” into cell A1 and “10” into B1 -- and leave all the other cells as they are – the corresponding savings of 41 percent will display in cell D1.
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Things You'll Need

  • Current and original prices
  • Calculator

Tips

  • You can choose to include sales tax or include it when calculating cost savings. As long as the sales tax rate is consistent, it won’t change the percentage saved.
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About This Article

Gina D'Amore
Co-authored by:
Financial Accountant
This article was co-authored by Gina D'Amore. Gina D'Amore is a Financial Accountant and the Founder of Love's Accounting. With 12 years of experience, Gina specializes in working with smaller companies in every area of accounting, including economics and human resources. She holds a Bachelor's Degree in Economics from Manhattanville College and a Bookkeeping Certificate from MiraCosta College. This article has been viewed 619,582 times.
5 votes - 100%
Co-authors: 12
Updated: November 20, 2023
Views: 619,582
Article SummaryX

To calculate cost savings percentage, start by subtracting the new price of the item from the original price. Then, divide the price difference by the original price. Finally, multiply that decimal by 100 to get the cost savings percentage. To learn how to calculate cost savings percentage in Microsoft Excel, scroll down!

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Thanks to all authors for creating a page that has been read 619,582 times.

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