Everyone loves a
good great sale. Have you ever noticed that sale signs are mainly red and yellow? This is because theses colours are eye-catching and stimulate our emotions. And most of our shopping is connected to our feelings. Read more about the psychology of colours here.
Back to discounts. up to 70% off That gets a lot of people excited. But 70% off does not have a value unless it is 70% off a certain amount. 70% off $100 is $70. But 70% off $10 is only $7. Regardless, that 70% off means that you are paying a mere 30% of the original price only.
What if there is an additional discount? Like 70% off and an additional 50% off? To an untrained mathematician, this looks like a deal that is beyond good – “it’s more than free. They may have to give me back some money!” Uh-uh. There’s no such thing. It’s like the Double Sunglasses problem from Dan Meyer’s 3-Act Math Task. He’d be blind if the sunglasses completely blocked his vision.
So, if it’s not 120% off, then what is the combined discount worth? Let’s see. The 70% off means you are paying 30% of the price. The additional 50% off is off that 30%, making it 15% off. So the combined discount is really 85% (70% + 15%) off, and not 120% off.
How about an item that is on sale for 60% off and the taxes are 15%, does this mean that you’re only getting a discount of 45%? That seems like a ripoff. Here’s really what happens. So, you get 60% off an item, which means you pay 40% of the regular price. The tax is applied onto the 40%. So that’s 15% of the 40%, which is 6%. In the end, you are getting a 56% discount.
And there you have it, a lesson in discounts and taxes.