The formula used in the calculations is:
\[ \text{new margin} = \frac{\text{old margin} - \text{discount}}{1 - \text{discount}} \]
This calculator computes the new margin after applying a discount based on the input values of the original margin and the discount percentage.
Let's assume the following:
Calculate the new margin:
\[ \text{new margin} = \frac{0.2 - 0.1}{1 - 0.1} = \frac{0.1}{0.9} = 0.1111 \approx 11.11\% \]
Therefore, the new margin after applying a 10% discount to a 20% margin is approximately 11.11%.
How do discounts affect margin?
Offering discounts lower your margin. However, discounts can attract new customers and increase your sales. They also help when you want to free up space by clearing old stock. Plan the discounts carefully so that, in the end, you increase your revenue.
How does a 10% discount affect the margin of 20%?
The margin goes down to around 11%. To arrive at this answer, recall the formula:
\[ \text{new margin} = \frac{\text{old margin} - \text{discount}}{1 - \text{discount}} \]
Plugging in the data, we obtain:
\[ \text{new margin} = \frac{0.2 - 0.1}{1 - 0.1} = \frac{0.1}{0.9} = 0.1111 \approx 11.11\% \]
