Chain discounts are multiple discounts which a business offers on its original list price. They are useful in encouraging customers to take certain actions such as to making a volume purchase. This chain discount calculator is useful for calculating the net price of a product after deducting a series of discounts.
If you need further information on the use of chain discounts and the calculations they involve this is more fully discussed in our chain discounts in accounting tutorial.
The Excel chain discount calculator, available for download below, is used by entering details of the original list price and up to five discount percentages. The calculator works out the net price of the product after deducting the discounts and also calculates the single equivalent discount rate (SED) for the chain discount. To use the calculator enter the details as follows:
Enter the original list price of the product.
Enter up to five discount percentages. For example, if the business offers 25% trade discount on a particular product and then a further 10% for purchasing in bulk quantities (normally quoted as 25/10%), then enter 25% in column B and 10% in column C, and leave the other discount percentages blank or enter 0%.
For each percentage the calculator works out the discount given and the net price after that particular chain discount. The chain discount calculator also provides a summary showing the list price, total discount and net price to be paid.
Finally, the single equivalent discount rate (SED) is calculated. The SED represents the discount rate which when applied to the original price results in the same net price and total discount as applying the chain of discounts. For example, a chain of two discounts of 25/10% is equivalent to a single discount rate of 32.5%
Chain Discount Calculator Download
The chain discount calculator spreadsheet is available for download in Excel format by following the link below.
The chain discount calculator is one of many financial calculators used in bookkeeping and accounting, discover another at the links below.
- Free Cash Flow Calculator
- Overhead Recovery Rate Calculator
- Business Loan Calculator – Lending Criteria
Users use this chain discount calculator at their own risk. We make no warranty or representation as to its accuracy and we are covered by the terms of our legal disclaimer, which you are deemed to have read. This is an example of a series discount calculator that you might use when considering how to calculate chain discounts. It is purely illustrative. This is not intended to reflect general standards or targets for any particular business, company or sector. If you do spot a mistake in this multiple discount calculator, please let us know and we will try to fix it.
About the Author
Chartered accountant Michael Brown is the founder and CEO of Plan Projections. He has worked as an accountant and consultant for more than 25 years and has built financial models for all types of industries. He has been the CFO or controller of both small and medium sized companies and has run small businesses of his own. He has been a manager and an auditor with Deloitte, a big 4 accountancy firm, and holds a BSc from Loughborough University.