# formula to calculate dollar value of discounts on revenue

#### gsullivan75

##### New Member
Hi all, I am struggling with working out what should be a simple formula in the yellow cell in the pic below:

To try and explain things:
I know the dollar profit I make is \$40
I know that this represents a 40% margin on revenue which has had X value of discounts applied to it (thus the 40% is referred to as 'discounted margin')
I know that I can calculate the discounted revenue that drives this 40% by using the formula \$40 / 40% = \$100
I know that there was 10%pp (percentage points) of discounts applied
Thus I know that the 'undiscounted margin' is 50%

So now what I now need is a formula that will give me the dollar value of the discounts from either the known 50% Undiscounted GP% or the -10%pp of discounts that will be applied.

What I do know from just playing with numbers is that the Undiscounted Rev needs to be \$120 and the discounts thus \$20 but I am going slowing mad trying to work this simple formula!!!

Regards
Gerry

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#### StephenCrump

##### MrExcel MVP
Welcome to the Forum!

You've had no answers yet, which suggests that people don't understand the question.

The things you say you "know" are not consistent. If you know:
a) you made \$40 profit, and
b) profit was 40% of discounted price

then I agree with you, discounted price must have been \$40/40% = \$100.

If that discounted price was based on a 10% discount on the original price, then the original price must have been \$100/(1 - 10%) = \$111.11.

The 40% applies to \$100, and the \$10% to \$111.11, so you can't add 40% + 10% to get 50%.

And it's not clear why the answer needs to be \$120?

#### johnnyL

##### Well-known Member
I agree the 'known' numbers do not jive.

discount as a percentage 10, discount as dollars 20 would mean a price of \$200 was needed.

#### Saba Sabaratnam

##### Active Member
Your gross profit is \$50 per \$100 revenue and therefore expense is \$50 per \$100 revenue excluding 10% discount.

In your example, you made \$40 profit after 10% discount and therefore Undisc rev must have been \$100 and dic rev \$90 (\$100 - \$10) shown below

\$120 revenue will generate \$48 profit not \$40 as shown below.

Kind regards

Saba

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