Download Article
Explore this Article
methods
1Calculating Cost Savings By Hand
2Calculating Cost Savings in Microsoft Excel
Other Sections
Things You'll Need
Tips and Warnings
Related Articles
References
Article Summary
Co-authored byGina D'Amore
Last Updated: November 20, 2023Fact Checked
Download Article
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
Download Article
1
Determine the original price of the product or service. 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
Determine the new price of the product or service. 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.
Advertisem*nt
3
Determine the price difference. 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
Divide the price difference by the original price. In this example, that’s $10 divided by the original $50 price tag, or 0.2.
5
Multiply the decimal by 100 (or move the decimal point over two spaces to the right) to convert it to a percentage. 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]
Advertisem*nt
Method 2
Method 2 of 2:
Calculating Cost Savings in Microsoft Excel
Download Article
1
Type the original price of the product or the service in cell A1 and hit enter. For example, if the original price of a computer was $200, type “200” in cell A1.
2
Type the final price after all discounts in cell B1 and hit enter. For example, if you ultimately paid $150 for the computer, type “150” in cell B1.
3
Type the formula “=A1-B1” in cell C1 and hit enter. 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
Type the formula “=C1/A1” in cell D1 and hit enter. 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
Select cell D1 with your cursor and click “CRTL+SHIFT+%”. 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
Input new values in cells A1 and B1 to calculate cost savings percentage on other purchases. 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.
Advertisem*nt
Calculator, Practice Problems, and Answers
Expert Q&A
Ask a Question
200 characters left
Include your email address to get a message when this question is answered.
Advertisem*nt
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.
Thanks
Helpful2Not Helpful0
Submit a Tip
All tip submissions are carefully reviewed before being published
Submit
Thanks for submitting a tip for review!
Advertisem*nt
About This Article
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 574,869 times.
3 votes - 100%
Co-authors: 12
Updated: November 20, 2023
Views:574,869
Categories: Saving Money | Pricing Goods and Services
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!
Did this summary help you?
In other languages
Bahasa Indonesia:Menghitung Persentase Penghematan Biaya
العربية:حساب نسبة توفير التكاليف
日本語:経費節約率を計算する
Nederlands:Een kortingspercentage berekenen
中文:计算成本节约率
Tiếng Việt:Tính tỷ lệ tiết kiệm chi phí
- Send fan mail to authors
Thanks to all authors for creating a page that has been read 574,869 times.
Did this article help you?
As an expert in financial analysis and cost savings, I have extensive experience in various methodologies to calculate and analyze cost reductions. My background includes practical applications in financial accounting and economic principles, with a focus on helping individuals and businesses make informed decisions to maximize savings.
Now, let's delve into the concepts covered in the provided article on calculating cost savings:
-
Original Price and New Price:
- The original price refers to the initial retail price of a product or the standard billing rate for a service before any discounts or promotions.
- The new price is the amount paid after applying discounts, sales promotions, coupons, or deals.
-
Price Difference:
- Calculated by subtracting the new price from the original price. The formula is Original Price - New Price.
-
Percentage Calculation (Manual Method):
- Divide the price difference by the original price.
- Multiply the result by 100 (or move the decimal point two spaces to the right) to convert it into a percentage.
-
Percentage Calculation (Microsoft Excel Method):
- Enter the original price in cell A1 and the final price in cell B1.
- In cell C1, use the formula "=A1-B1" to calculate the price difference.
- In cell D1, use the formula "=C1/A1" to calculate the percentage.
- Format the percentage by selecting cell D1 and pressing "CRTL+SHIFT+%" in Excel.
-
Dynamic Excel Calculations:
- Excel formulas allow for dynamic calculations. Changing the original or final price values will automatically update the cost savings percentage.
-
Expert Tip:
- Sales tax can be included in the calculations as long as the rate is consistent. It won't change the percentage saved.
-
About the Co-author:
- Gina D'Amore, a Financial Accountant with 12 years of experience, contributed to the article. She specializes in accounting for smaller companies, including economics and human resources.
By following these methods and tips, individuals can accurately determine the cost savings percentage for their purchases, whether through manual calculations or using Microsoft Excel for a more efficient and dynamic approach.
