Page 1 of 2

Is this 25% savings?

Posted: Tue Aug 13, 2019 12:32 pm
by Calico
So we have an interesting math question at work. I hope it's okay to post it here since it's not really personal to me, but it is for consumers and the idea is to be fair to them. And people here are good with money and numbers, so it seems like the best place to ask.

We are offering a workshop that has two rates to pay. An early bird rate and a regular registration rate. The early bird rate is $160 and the regular rate is $200. The discussion at work is if we can advertise the early bird as "save 25% by registering today."

A few of us say no, that saving 25% off full price would be $150, not $160. The savings is 20%.

But the ones who want to advertise it are saying that $200 is 25% more than $160 (they are doing $160 X 25% = $40 and adding $40 to the $160 comes out to the full $200 so therefore, 25% savings).

Who is presenting the more honest savings to the customer? We are a small organization and we are basically torn about what to do, but we want to be honest.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:38 pm
by feehater
I think you are correct. Discounts are typically calculated off the full price.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:38 pm
by Glockenspiel
25% savings would be paying $150 instead of $200. $160 would be a 20% savings. I personally would find it dishonest if I saw a company saying 25% off and it's really only 20% off. This would be a slight turn-off for me, to the company or the deal.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:40 pm
by rocket354
It is 20% savings. $160 is 20% less than $200.

I don't see why the 20/25% differentiation should make that much of a difference, but people will note that it's really 20% savings and conclude one or both of 1) you guys don't know how to do math, or, 2) you guys are deceptive. Either will undercut the credibility of the people putting on the workshop, likely doing more damage than any difference between advertising it as 20 or 25% would do otherwise.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:42 pm
by Jags4186
I know this is going to sound harsh but it's shocking to me that people who are in charge of these types of promotions can't do basic 4th grade math.

$160 is 20% less than $200. It is a 20% discount.

However, if you want to make the marketing geniuses' heads explode, tell them they are free to advertise it as a LTO $160 deal before the 25% increase comes into effect.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:44 pm
by lazydavid
Agree with the above. This is simple math, and calling it a 25% discount is both incorrect and dishonest. There are two honest ways to frame these prices:

Register early for a 20% discount
Price will increase by 25% after X date

Both of those are true. "Register early for a 25% discount" is a bald-faced lie.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:45 pm
by rj342
Jags4186 wrote:
Tue Aug 13, 2019 12:42 pm
I know this is going to sound harsh but it's shocking to me that people who are in charge of these types of promotions can't do basic 4th grade math.

$160 is 20% less than $200. It is a 20% discount.

However, if you want to make the marketing geniuses' heads explode, tell them they are free to advertise it as a LTO $160 deal before the 25% increase comes into effect.
:sharebeer

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:45 pm
by CoastalWinds
Why not call the retail price $300 and then say it’s a savings of 46% off?

I buy based on price, not how much I “save”.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:47 pm
by HomeStretch
The $160 early fee is a 20% discount from the $200 full fee. Said another way, the $200 full fee is 25% more than the $160 early fee.

If showing a higher % on the registration form is important, just adjust the wording of the form to say something like either “receive a 20% discount for registering early...” or “register by xx/xx for $160 after which it’s $200 (25% more)...”

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:48 pm
by runner3081
Jags4186 wrote:
Tue Aug 13, 2019 12:42 pm
I know this is going to sound harsh but it's shocking to me that people who are in charge of these types of promotions can't do basic 4th grade math.
+1000

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:52 pm
by Northern Flicker
I agree it is 20% off. Suggestion: advertise as “Save $40 by registering today”. That’s what actually matters anyway.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 12:57 pm
by wilked
Jags4186 wrote:
Tue Aug 13, 2019 12:42 pm
I know this is going to sound harsh but it's shocking to me that people who are in charge of these types of promotions can't do basic 4th grade math.

$160 is 20% less than $200. It is a 20% discount.

However, if you want to make the marketing geniuses' heads explode, tell them they are free to advertise it as a LTO $160 deal before the 25% increase comes into effect.
this

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:09 pm
by Calico
Thanks for the answer. For a while there, I thought I was taking crazy pills at work today. Those of us saying it's not a 25% savings but only a 20% are 1) in the minority and 2) not the people who are making this decision. The only reason it came up and I got in the mix was because our IT guy (who is also our webmaster) was asked to create a webpage with the information. He said it was wrong and debate ensued and now we are holding off on announcing anything until we can all agree. I am gone for the day but I suspect we will have a short meeting about his tomorrow. I need to think of a basic way to explain things because I know at least one person is very opinionated on this and will fight tooth and nail to say 25% savings.

It is minor stuff (the $40 difference) but I don't want us to look like we are bad with math (or liars).

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:13 pm
by Calico
Jags4186 wrote:
Tue Aug 13, 2019 12:42 pm
I know this is going to sound harsh but it's shocking to me that people who are in charge of these types of promotions can't do basic 4th grade math.

$160 is 20% less than $200. It is a 20% discount.

However, if you want to make the marketing geniuses' heads explode, tell them they are free to advertise it as a LTO $160 deal before the 25% increase comes into effect.
I actually proposed that as the only way to claim 25% and they walked away from me. The IT guy (who flagged this issue in the first place) busted out laughing after they left.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:15 pm
by chevca
The basic way to explain it is, the regular price is $200... EVERYTHING is figured off of that number.

What is there to debate beyond what is above, below, or sideways from the regular price?

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:16 pm
by muffins14
As others have said, you’re thinking about it the right way.

Imagine the sale price was $100 instead of $160; you wouldn’t advertise it as 100% savings just because the original price is 100% more than the sale price of $100

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:16 pm
by dm200
"Marketing" cannot do such math (correctly) either! I deal with that as part of my current job!

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:21 pm
by greg24
I'm shocked that the marketing team can't do 4th grade math.

:oops:

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 1:22 pm
by CoastalWinds
greg24 wrote:
Tue Aug 13, 2019 1:21 pm
I'm shocked that the marketing team can't do 4th grade math.

:oops:
The dumbing down of America is almost complete. If only there was a stock that invested in this phenomenon.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 2:08 pm
by suemarkp
Those people also probably think you're even if your portfolio had a 25% loss and then a 25% gain. Percentages don't work the same up and down and don't cancel out.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 2:32 pm
by dbr
Maybe you should remind the marketing people of the hazards of false advertising, even if only a publicity hit.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 2:44 pm
by 3-20Characters
Basic percentage problems are hard for most people which is why, I think, many sales are advertised that way. If there’s an “error” in favor of the merchant, one or two bogleheads may complain but most people won’t notice. I’m not sure this is a new phenomenon though. I can remember similar perplexity among the masses in my school days and I’m not young.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 2:58 pm
by Glockenspiel
CoastalWinds wrote:
Tue Aug 13, 2019 1:22 pm
greg24 wrote:
Tue Aug 13, 2019 1:21 pm
I'm shocked that the marketing team can't do 4th grade math.

:oops:
The dumbing down of America is almost complete. If only there was a stock that invested in this phenomenon.
Idiocracy. Blame the failure of the U.S. education system and the fact that we prioritize almost everything above education.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:10 pm
by HomeStretch
Calico wrote:
Tue Aug 13, 2019 1:09 pm
Thanks for the answer. For a while there, I thought I was taking crazy pills at work today. Those of us saying it's not a 25% savings but only a 20% are 1) in the minority and 2) not the people who are making this decision. The only reason it came up and I got in the mix was because our IT guy (who is also our webmaster) was asked to create a webpage with the information. He said it was wrong and debate ensued and now we are holding off on announcing anything until we can all agree. I am gone for the day but I suspect we will have a short meeting about his tomorrow. I need to think of a basic way to explain things because I know at least one person is very opinionated on this and will fight tooth and nail to say 25% savings.

It is minor stuff (the $40 difference) but I don't want us to look like we are bad with math (or liars).
The compromise is to “advertise” the dollar amount off ($40). Forget about the %.

In the corporate world, it’s not worth the $ of the salaries (or time) of everyone attending the meeting to continue to debate whether it’s 20% or 25%.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:12 pm
by JupiterJones
CoastalWinds wrote:
Tue Aug 13, 2019 1:22 pm
The dumbing down of America is almost complete. If only there was a stock that invested in this phenomenon.
TSLA?

:P

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:14 pm
by megabad
Calico wrote:
Tue Aug 13, 2019 12:32 pm
"save 25% by registering today." "Spend 25% more if you wait"
fixed. not sure what the obsession is with 25% though.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:19 pm
by neilpilot
Don't know why, but this reminds me of my wife's reaction when she sees an ad that say "Now only .45₵". As she sees it, 0.45 cents is less than a penny!

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:28 pm
by Gnirk
i agree. Advertise it as "save $40...", instead of using the percentage. And it is only a 20% savings:
$200-$160=$40.
$40/$200= 20%

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:30 pm
by dbr
Gnirk wrote:
Tue Aug 13, 2019 3:28 pm
i agree. Advertise it as "save $40...", instead of using the percentage. And it is only a 20% savings:
$200-$160=$40.
$40/$200= 20%
Maybe marketing will see that as a good suggestion. Since 40 is a bigger number than 25 it should be more attractive and some people will even confuse that with 40% off.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 3:40 pm
by knowledge
If Amazon advertised a good as 25% off, and showed an original price of $200 marked down to only $160, you can bet that the FTC would come a knocking. This isn't open to debate, the math is clear: this is 20% savings.

Your situation doesn't seem that high profile, but for your company's sake you want to do this right. You'll end up confusing consumers and you'll be in the wrong if ever come a time that someone decides to escalate the situation.

Just to make the point clearer, how would your team propose advertising a promotion from $200 down to $100?

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 5:06 pm
by Calico
dbr wrote:
Tue Aug 13, 2019 3:30 pm
Gnirk wrote:
Tue Aug 13, 2019 3:28 pm
i agree. Advertise it as "save $40...", instead of using the percentage. And it is only a 20% savings:
$200-$160=$40.
$40/$200= 20%
Maybe marketing will see that as a good suggestion. Since 40 is a bigger number than 25 it should be more attractive and some people will even confuse that with 40% off.
I was thinking about that too. Why not use the bigger number? Maybe this is why I am not in marketing. haha.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 5:27 pm
by TxAg
The owner if a $60M business got this wrong last week. I politely corrected him but he didn't budge.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 6:16 pm
by fru-gal
Math, what about science. We swim in a sea of ignorance. Was it always like this, or have the schools failed big time in the last couple of generations?

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 6:23 pm
by Cheez-It Guy
neilpilot wrote:
Tue Aug 13, 2019 3:19 pm
Don't know why, but this reminds me of my wife's reaction when she sees an ad that say "Now only .45₵". As she sees it, 0.45 cents is less than a penny!
As she sees it? She is correct, even if the planned / intended price is obvious. The ad is wrong by a factor of 100. Nothing to debate.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 6:35 pm
by joe-kr
muffins14 wrote:
Tue Aug 13, 2019 1:16 pm

Imagine the sale price was $100 instead of $160; you wouldn’t advertise it as 100% savings just because the original price is 100% more than the sale price of $100
I think above is the best explanation for the math challenged folks. Let them chew on that example.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 6:38 pm
by Trader Joe
Calico wrote:
Tue Aug 13, 2019 12:32 pm
So we have an interesting math question at work. I hope it's okay to post it here since it's not really personal to me, but it is for consumers and the idea is to be fair to them. And people here are good with money and numbers, so it seems like the best place to ask.

We are offering a workshop that has two rates to pay. An early bird rate and a regular registration rate. The early bird rate is $160 and the regular rate is $200. The discussion at work is if we can advertise the early bird as "save 25% by registering today."

A few of us say no, that saving 25% off full price would be $150, not $160. The savings is 20%.

But the ones who want to advertise it are saying that $200 is 25% more than $160 (they are doing $160 X 25% = $40 and adding $40 to the $160 comes out to the full $200 so therefore, 25% savings).

Who is presenting the more honest savings to the customer? We are a small organization and we are basically torn about what to do, but we want to be honest.
The early bird discount is a savings of 20%

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 6:48 pm
by Calico
joe-kr wrote:
Tue Aug 13, 2019 6:35 pm
muffins14 wrote:
Tue Aug 13, 2019 1:16 pm

Imagine the sale price was $100 instead of $160; you wouldn’t advertise it as 100% savings just because the original price is 100% more than the sale price of $100
I think above is the best explanation for the math challenged folks. Let them chew on that example.
I am going to use Muffins14 hypothetical 100% savings example. I think I may even just casually mention it to everyone before the meeting with the boss, just in case it ends the meeting before it starts (allowing people to save face). I don't want to embarrass people in a group setting in front of the boss.

What I am embarrassed about is that they were all so convinced they were right and they were the majority that I started to doubt myself. :shock:

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 7:01 pm
by arcticpineapplecorp.
why don't you ask the accounting department what they think? They should be the final answer.

If the accounting department says it's a 25% savings tell us the name of the company. If it's publicly traded, I'd like a company to short.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 7:02 pm
by nisiprius
It is a 20% savings.

If there is an argument, I suggest this as a way to settle it. Take out a calculator. No, wait, ask them to take out their calculator. A smartphone calculator is fine. Ask them to press the buttons

2 0 0 - 2 5 % =

They will see "150." Then ask them to try

2 0 0 - 2 0 % =

They will see "160."
fru-gal wrote:
Tue Aug 13, 2019 6:16 pm
Math, what about science. We swim in a sea of ignorance. Was it always like this, or have the schools failed big time in the last couple of generations?
It was always like this. People fail to allow for how much adults continue to learn in adulthood, and fail to allow for how much the accepted corpus of general knowledge changes.

Kids today! They can't calculate a square root with pencil and paper, they don't understand "Copyright MCMXXXIX," and they are so careless they keep forgetting the apostrophe in "Hallowe'en."

On the other hand, I am perfectly unaware of anything that the kids know that I don't know.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 7:41 pm
by Jags4186
nisiprius wrote:
Tue Aug 13, 2019 7:02 pm
they are so careless they keep forgetting the apostrophe in "Hallowe'en."
Halloween is the preferred spelling and that spelling has been around since 1786 according to the OED.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 9:28 pm
by scorcher31
I agree with whoever said to ask them what would the discount be if it was still $200 normally, but early registration was only $100. The right answer is 50% off which would be equivalent to your 20% off in the real life scenario. The people that are currently claiming the real scenario is 25% off would say this imaginary example is 100% off. Hopefully they will understand that 100% off means it is free and that doesn't make any sense.

Re: Is this 25% savings?

Posted: Tue Aug 13, 2019 11:39 pm
by Goal33
scorcher31 wrote:
Tue Aug 13, 2019 9:28 pm
I agree with whoever said to ask them what would the discount be if it was still $200 normally, but early registration was only $100. The right answer is 50% off which would be equivalent to your 20% off in the real life scenario. The people that are currently claiming the real scenario is 25% off would say this imaginary example is 100% off. Hopefully they will understand that 100% off means it is free and that doesn't make any sense.
This is a good analogy imo

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 12:40 am
by anhonymous
I want to give your team the benefit of doubt that they indeed know math. My experience with marketers who have P&L responsibility is that they are very good at math.
I suspect this may be more a messaging objective with 25% being an attractive eye catcher. If so I would suggest you rebrand the message as “ avoid 25% increase by registering early”

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 5:33 am
by Calico
To answer someone's question, we aren't a fortune 500 or publicly traded. We are actually a local trade association/non profit. We don't have an accounting department, although there is an accountant on staff. Unfortunately, he's on vacation this week. I am sure once I point out the hypothetical 100% savings this will all be fixed. Thanks for confirming that I am not crazy on this. It was just weird the way others insisted.

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 8:32 am
by dm200
Another approach would be to state that the price will go up 25% from the early bird rate to the regular rate.

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 8:36 am
by lazydavid
Calico wrote:
Tue Aug 13, 2019 6:48 pm
joe-kr wrote:
Tue Aug 13, 2019 6:35 pm
muffins14 wrote:
Tue Aug 13, 2019 1:16 pm

Imagine the sale price was $100 instead of $160; you wouldn’t advertise it as 100% savings just because the original price is 100% more than the sale price of $100
I think above is the best explanation for the math challenged folks. Let them chew on that example.
I am going to use Muffins14 hypothetical 100% savings example. I think I may even just casually mention it to everyone before the meeting with the boss, just in case it ends the meeting before it starts (allowing people to save face). I don't want to embarrass people in a group setting in front of the boss.

What I am embarrassed about is that they were all so convinced they were right and they were the majority that I started to doubt myself. :shock:
Go even farther. Let's say you had a special promotion where select customers were charged only $50. This is obviously a 300% discount, right?

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 9:44 am
by coupleofcents
Just change the rate to $150.00 so marketing can keep their 25% savings language.

40 dollars off doesn't work as well I think because people don't have an anchor point if this is there first time paying for this product/service.

Btw, I personally don't find 20 or 25% off anything that enticing.

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 9:53 am
by dbr
coupleofcents wrote:
Wed Aug 14, 2019 9:44 am
Just change the rate to $150.00 so marketing can keep their 25% savings language.

40 dollars off doesn't work as well I think because people don't have an anchor point if this is there first time paying for this product/service.

Btw, I personally don't find 20 or 25% off anything that enticing.
But that would be savings of 33 1/3%, which is also a number that sounds good. When you print that 1/3 it makes the customer think they are paying 1/3 the full price.

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 9:57 am
by dm200
coupleofcents wrote:
Wed Aug 14, 2019 9:44 am
Just change the rate to $150.00 so marketing can keep their 25% savings language.
40 dollars off doesn't work as well I think because people don't have an anchor point if this is there first time paying for this product/service.
Btw, I personally don't find 20 or 25% off anything that enticing.
To me, 20% or 25% seems enticing to me - and why I usually took advantage of the "early bird" specials.

Just "seat of the pants", I would notice an advertised (and accurate) 25% off much more enticing than 20% off.

Re: Is this 25% savings?

Posted: Wed Aug 14, 2019 10:08 am
by abuss368
I would expect that the discount would be calculated off of the full price.