Net Price Factor Calculator

Reviewed By: Scott Hickam (MBA, Finance)

Enter the discount rate and tax rate into the calculator to determine the Net Price Factor. You can also enter a list price (and optional fees) to calculate the net price, and in Single Discount mode you can solve for a required discount rate or list price given a target net price.

Single Discount

Discount Series

Mode List Price ($) Discount Rate (%) Tax Rate (%) Fees (optional) Are fees taxable? Target Net Price ($) (used in Solve modes)

Net Price Factor

Net Price ($)

Discount Amount ($)

Tax Amount ($)

Net Price Factor Formula

The following formula is used to calculate the Net Price Factor when a percentage discount is applied first and then sales tax (or a similar add-on tax) is applied to the discounted price.

NPF = (1 - (D / 100)) * (1 + (T / 100))

Variables:

NPF is the Net Price Factor (a multiplier)
D is the discount rate (%)
T is the tax rate (%)

To calculate the Net Price Factor, subtract the discount rate from 100 and divide the result by 100. Then, add the tax rate to 100 and divide the result by 100. Multiply the two results together to get the Net Price Factor.

Note: If you have flat fees (shipping/handling/etc.), they are added separately and can be taxable or non-taxable depending on your situation; the formula above only represents the percentage-based factor from discount and tax.

What is a Net Price Factor?

A Net Price Factor (NPF) is a multiplier used in pricing and invoicing to convert a list price into a net price after applying a percent discount and then applying tax. When only a percent discount and a tax rate apply (no flat fees), the relationship is:

Net Price = List Price × NPF

Because tax increases price and discounts decrease price, NPF can be less than 1, equal to 1, or greater than 1 depending on the rates used.

How to Calculate Net Price Factor?

The following steps outline how to calculate the Net Price Factor.

First, determine the discount rate (D) as a percentage (%).
Next, determine the tax rate (T) as a percentage (%).
Next, use the formula NPF = (1 - (D / 100)) * (1 + (T / 100)).
Finally, calculate the Net Price Factor (NPF).
After inserting the variables and calculating the result, check your answer with the calculator above.

Example Problem:

Use the following variables as an example problem to test your knowledge.

discount rate (D) = 20%

tax rate (T) = 8%

NPF = (1 − 0.20) × (1 + 0.08) = 0.8 × 1.08 = 0.8640