Week 3 — 50% Off What?

A discount is a comparison, not a fact. This week asks what a reference price is measuring, who set it, and why it can be measured against itself.

10 August 2026

Core question#

What is a discount being measured against?

“50% off” compares two numbers. The first is the sale price. The second is the reference price: the “was” price or other number the retailer chose to print. That reference price may or may not be a price anyone really paid. Week 1’s Option A (“was $200, now $100”) used exactly this trick: the maths is right, but the page does not tell us where $200 came from.

Anchoring#

Anchoring is the wider effect: the first number you see changes how you judge the next number. A reference price is anchoring with a dollar sign. It does not need to be false to work; it only needs to be seen first.

Historical baselines vs invented ones#

A reference price can be:

• a genuine recent price the item sold at
• a manufacturer’s suggested price that few shops use
• a number with no clear source at all

The percentage-off badge can look the same in all three cases. For now, ask “was $X according to whom, and when?” before treating a discount as useful information.

Percentage vs money#

Discount percentage is not the same thing as money saved.

30% off a $2,000 item is $600. 30% off a $20 item is $6. Both badges say “30% OFF” in the same font size. If two purchases are competing for the same budget, the money saved is the number that matters, not the number printed larger.

The $249 headphones#

Say the $249 headphones now appear with a tag reading was $349 now $249. If $349 was a genuine, recently-charged price, $249 is meaningfully cheaper than what the market has accepted for this item. If $349 is a number invented for the tag, the “$100 off” claim is measuring against fiction, and $249 must be judged on its own, against other headphones at or near $249 — not against a number the retailer chose to make $249 look generous.

The $349 tag is invented for this example. It is not a claim that any real retailer has printed this, or any other, reference price.

Learning outcomes#

By the end of this week, you should be able to:

• define reference price and distinguish it from market price
• explain how anchoring works, not just name it
• classify a reference price as genuine, rarely-real, or invented
• compute money saved from a percentage discount, not just quote the percentage
• explain why two discounts of equal percentage can save very different amounts of money

Before class#

Find one “X% off” claim — a website, an email, a physical tag — and note both the percentage and the reference price it’s measured against. If you can’t find the reference price anywhere near the badge, note that too; that absence is itself data.

In class#

Take the discount you brought. As a group, sort it into “genuine baseline”, “rarely-real baseline” (a manufacturer’s suggested price nobody actually charges), or “no traceable origin” — and say what evidence would move it up or down that scale.

What you should leave knowing#

“X% off” only helps once you trust the number it is measured against. Percentage off and money saved are different numbers, and the badge usually prints only one of them.

Where this goes#

Week 4 moves from a single discount to several at once — coupons, bundles, and thresholds that combine, and sometimes actively work against the combination a shopper expects.