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How to Calculate Two Successive Percentage Discounts

Learn the a+b-ab/100 formula for two successive percentage discounts, with a worked example and practice questions with answers.

mediumQ188 of 225 in Aptitude Est. time: 5 minsLast updated:
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Expected Interview Answer

Two successive discounts of a% and b% are NOT equivalent to a single (a+b)% discount; the true single equivalent discount is a + b - ab/100, because the second discount applies to the already-reduced price, not the original.

After the first discount of a%, the price becomes (1 - a/100) of the original; applying the second discount of b% to that reduced price gives (1 - a/100)(1 - b/100) of the original. Expanding this product and converting back to a percentage-off form yields the single equivalent discount a + b - ab/100, which is always less generous to the buyer than the naive sum a + b because the ab/100 term subtracts back some of the apparent saving. This matters commercially too: retailers advertise successive discounts like '30% off, then extra 10%' precisely because it sounds bigger than the equivalent flat 37% off. Always multiply the retained fractions in sequence rather than adding percentages when discounts stack.

  • One formula replaces sequential percentage arithmetic
  • Explains why marketed successive discounts look bigger than they are
  • Prevents the common error of simply adding discount percentages
  • Generalizes to any number of successive discounts by chaining retained fractions

AI Mentor Explanation

A bowler’s economy rate drops 20% after a coaching tweak, then drops a further 10% after a fitness block — but the second drop applies to the already-lower rate, not the original one, so the combined improvement is not 30% but 20+10-2=28%. This is exactly how two successive percentage discounts on a price compound: each cut applies to what remains, not to the starting figure.

Worked example

Step-by-Step Explanation

  1. Step 1

    Convert each discount to a retained fraction

    a% discount leaves (1 - a/100) of the price.

  2. Step 2

    Multiply the retained fractions

    Final price fraction = (1 - a/100)(1 - b/100).

  3. Step 3

    Convert back to equivalent discount

    Equivalent discount % = a + b - ab/100.

  4. Step 4

    Sanity check

    The equivalent discount is always slightly less than the naive sum a + b.

What Interviewer Expects

  • Recognizing successive discounts multiply, not add
  • Correct derivation of a + b - ab/100
  • Applying it to compute a final price directly
  • Awareness this is a common marketing/pricing trick

Common Mistakes

  • Simply adding the two discount percentages
  • Applying the second discount to the original price instead of the reduced price
  • Sign errors when converting between discount and retained fraction
  • Forgetting the formula only holds for exactly two successive discounts (chain further for more)

Best Answer (HR Friendly)

Successive discounts don’t add up the way people assume — a 20% discount followed by a 10% discount isn’t 30% off, it’s 28% off, because the second discount is taken on the already-reduced price. I convert each discount to what fraction of the price remains, multiply those fractions together, and convert back to get the single equivalent discount, which is always a bit less than the simple sum.

Follow-up Questions

  • How would you extend the formula to three successive discounts?
  • How does a successive discount differ from a successive markup?
  • If the equivalent single discount is known, how do you split it into two discounts of a chosen ratio?
  • Why do retailers prefer advertising "30% + extra 10%" over a flat 37% off?

MCQ Practice

1. Successive discounts of 10% and 20% are equivalent to a single discount of?

10+20-(10x20)/100 = 30-2 = 28%.

2. A price of 500 after successive discounts of 25% then 10% becomes?

500 x 0.75 x 0.90 = 337.5.

3. Two successive discounts of a% and b% are always equivalent to a single discount that is?

The equivalent discount is a+b-ab/100, which is always less than a+b since ab/100 > 0.

Flash Cards

Formula for equivalent single discount of a% then b%?a + b - ab/100.

Why is it less than a+b?The second discount applies to an already-reduced price, so the overlap ab/100 is subtracted back.

How to compute the final price directly?Multiply the original price by (1 - a/100)(1 - b/100).

Common error to avoid?Adding the two discount percentages directly instead of multiplying retained fractions.

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