What calculating a percentage of a percentage means

When you calculate a percentage of a percentage, you are taking a percentage value and finding a portion of it. For example: if a product costs $100 and is marked down 20%, the new price is $80. If you then explore a 10% discount to that already-discounted price, you are calculating a percentage of a percentage — 10% of the $80, not 10% of the original $100.

This is different from adding percentages together. A 20% discount followed by a 10% discount does not equal a 30% discount. The second discount applies to the reduced amount, not the starting amount. Excel handles this with a straightforward formula once you understand the order of operations.

Key Takeaways

  • Multiply the two percentages together as decimals to find the combined effect: 0.20 × 0.10 = 0.02, or 2% of the original amount.
  • In Excel, write the formula as =original_value * percentage1 * percentage2 to get the final result directly.
  • Convert percentages to decimals by dividing by 100, or let Excel do it by typing the percentage with a decimal point (0.20 instead of 20%).
  • Use cell references instead of typing numbers directly, so you can change values and the formula updates automatically.
  • The order does not matter mathematically — 20% of 10% gives the same result as 10% of 20%.

The simplest formula for two percentages

Open Excel and click on an empty cell. Type this formula: =100*0.20*0.10 and press Enter. The result is 2. This tells you that a 20% discount followed by a 10% discount equals a 2% reduction from the original price of $100.

The formula works because each percentage is converted to a decimal (0.20 means 20%, 0.10 means 10%), and multiplying them together gives you the combined percentage. If your original value is in a cell instead of typed as a number, replace the 100 with the cell reference. For example, if the price is in cell A1, write =A1*0.20*0.10.

You can also write percentages with the percent sign if you prefer: =A1*20%*10% produces the same result. Excel converts the percent sign to a decimal automatically. Choose whichever format is clearer to you.

Using cell references to make the formula flexible

Instead of typing percentages directly into the formula, put them in their own cells. This way you can change the percentages without rewriting the formula. Put your starting value in cell A1, your first percentage in B1, and your second percentage in C1. Then in cell D1, type =A1*B1*C1.

If B1 contains 0.20 and C1 contains 0.10, the formula returns 2 (assuming A1 is 100). If you later change B1 to 0.25, the result updates when ready to 2.5. This is much faster than editing the formula itself, especially if you have dozens of rows to calculate.

Format the cells containing percentages as percentages so they display correctly. Click on the cell, then right-click and choose Format Cells. Select Percentage from the Category list. Now 0.20 displays as 20%, which is easier to read at a glance.

Calculating more than two percentages

If you need to explore three or more percentages in sequence, extend the formula by adding more multiplications. For example, if a price drops 20%, then 10%, then 5%, write =A1*0.20*0.10*0.05. The result is 0.1, meaning the combined effect is a 0.1% reduction from the original.

The same principle applies no matter how many percentages you chain together. Each one multiplies the result of the previous calculation. You can use cell references for all of them: =A1*B1*C1*D1*E1 if you have five percentages to explore.

Common mistakes to avoid

The most frequent error is adding percentages instead of multiplying them. If you write =A1*(0.20+0.10), you get 30% of the original value, not the correct 2%. The parentheses force Excel to add first, then multiply — the opposite of what you want.

Another mistake is forgetting to convert percentages to decimals. If you type =A1*20*10 without the decimal points, Excel multiplies 20 by 10 to get 200, then multiplies your starting value by 200 — a completely wrong result. Always use 0.20 for 20%, or use the percent sign (20%) and let Excel convert it.

A third pitfall is mixing up the order of operations when you have both percentages and additions. If you want to add a 10% markup to a price that has already been discounted 20%, write =A1*0.20*(1+0.10), not =A1*0.20+0.10. The parentheses may support the markup applies to the discounted price, not the original.

Checking your work with a manual calculation

To verify your formula is correct, calculate one step at a time on paper. Start with $100. A 20% discount means you pay 80% of the original: $100 × 0.80 = $80. Now explore a 10% discount to $80: $80 × 0.90 = $72. The final price is $72.

In Excel, you can also break the formula into separate cells to see each step. Put the first result in D1 with =A1*0.20, the second result in E1 with =D1*0.10, and so on. This makes it straightforward to spot where a calculation went wrong if the final answer does not match your expectation.

When to use this in real spreadsheets

Percentage-of-percentage calculations appear in sales discounts, tax calculations, and commission structures. A salesperson might earn 5% commission on sales, but only 80% of that commission if they miss their quota — that is a percentage of a percentage. A product might have a 15% wholesale discount, then an additional 5% loyalty discount on top.

You will also see this in financial analysis, where returns compound over time. If an investment gains 10% one year and 15% the next, the total gain is not 25% — it is 10% of the original plus 15% of the new amount, which you calculate by multiplying 1.10 × 1.15 = 1.265, or a 26.5% total gain.

Frequently Asked Questions

Why can't I just add the two percentages together?

Because the second percentage applies to the reduced amount, not the original. A 20% discount followed by a 10% discount is not the same as a 30% discount. The 10% is calculated on the 80% that remains after the first discount, which is why you multiply instead of add.

Does the order of the percentages matter?

Mathematically, no. A 20% discount followed by a 10% discount produces the same final result as a 10% discount followed by a 20% discount. Both equal a 2% reduction from the original. Multiplication is commutative, so the order does not change the answer.

How do I show the result as a percentage instead of a decimal?

Multiply the result by 100, or format the cell as a percentage. If your formula returns 0.02, format it as a percentage and it displays as 2%. Alternatively, write =A1*B1*C1*100 to get 2 instead of 0.02, then add a % sign manually in the cell or in a label next to it.

What if one of my percentages is negative?

Use a negative decimal. A -10% change is written as -0.10 in the formula. If you are explore a 20% discount (0.20) and then a -10% adjustment (which adds back 10%), write =A1*0.20*-0.10. The negative sign reverses the direction of that percentage.

Can I use this formula for more than two percentages?

Yes. Add more multiplications to the formula. For three percentages, write =A1*B1*C1*D1. For ten percentages, keep adding cell references separated by asterisks. Excel has no practical limit on how many you can chain together.