What do you meant by 20% off (八折優惠), in Chinese it is known as 80%of the price. Actually, they carry the same message of giving a certain amount of discount. Generally, people would have a concept of when using every $100, you can save $20. Very often, when all people think that it is right, the answer is completely wrong.
No ! No ! No !
Wrong ! Wrong ! Wrong !
For example when the original price of T-shirt is $100, now they are doing a promotion of less 20%, that means people can use $80 to buy a product whose original price is $100. How much can he saves. $20 ? ! ? But mind that what he has taken out is only $80 and not $100. If you multiply $80 by 20%, the answer is $16 and not $20. To make it clear, $20 is 25%of $80; therefore, what he had already saved is 25% and not 20%.
So how about the $100, it is a none-existing amount. No matter in accounting or in insurance, they would not use a not yet transition price for entry (入數). The original price is a not yet transaction price, it is just an offer. The insurance would not use a not yet transition price for entry. Because the company has the right to lower or even mark up the price. Or use it as a gift. That is when the total purchase of a client is up to a certain amount, then the company can present a T-shirt as a gift. The insurance company still have to insure on the product, would not refuse to insure because it has no market price. The value of that product would be calculated on the cost, which was a transaction done and the price would never change.
So take the other way round. When the original price of a pair of jeans is mark as $125, after a 20% discount, people can buy it at the price of $100. So how much he saves ? Apparently is $25. But what he has taken out is $100, and he can buy the jeans of $125, he saves $25 for a product of 20% discount.
So how much you can save for every $100 on a 20%discount basis, it is not 20%, but 25%. It is not $20 but $25.
Mind your concept and you have to correct the concept of other people also. When every thinks that it is right, it may be wrong.
So no matter in the field of investment or daily life, there are a lot of mis-concepts needed to be corrected. Let’s carry on next time !
Please scroll on the right hand side of this page, and you will see a column named “Categories”. Just click on the item”Philosophy of Life” and you can see my related article concerning this topic.
This article also appears in my other blog of http://renren.com/danielyue2009 and normally will be renewed on Saturday evening