Draftelio

How to Show Discounts and Tax on a Quote

· 4 min read

Discounts and tax are where quotes most often go wrong: a total that does not match the lines, a tax figure the client cannot reproduce, or a monthly fee added to a one-off price. This guide shows a clear way to present both, with the exact arithmetic the Draftelio quote builder uses.

This article explains arithmetic and presentation. It does not tell you which tax applies to your business, at what rate, or how it must be shown in your country. Those rules vary — check them with your local tax authority or an accountant.

Discounts: show them per line

The clearest discount is attached to a specific line, in percent. The client sees the full price, the discount and the result:

Item Qty Unit price Discount Amount
Card reader with keypad 2 pcs $340.00 10% $680.00 $612.00

The calculation for a line:

  1. Line amount before discount = quantity × unit price = 2 × $340.00 = $680.00
  2. Discount = $680.00 × 10% = $68.00
  3. Line amount = $680.00 − $68.00 = $612.00

At the end of the quote, it is good practice to show the total saving — "You save $68.00 with discounts". It reminds the client what they are getting.

Discount first, then tax

Apply discounts before tax. Tax is calculated on what the client actually pays for the goods or services, which is the discounted amount. If you calculated tax on the full price and then subtracted the discount, the tax figure would be too high.

Prices that exclude tax

If your prices exclude tax, tax is added on top. With items worth $100.00 after discounts and a 20% tax rate:
Subtotal $100.00
Tax 20% $20.00
Total $120.00
  • Tax = subtotal × rate ÷ 100 = 100 × 20 ÷ 100 = 20.00
  • Total = subtotal + tax

This is common in business-to-business quotes, where the buyer thinks in amounts before tax.

Prices that include tax

If your prices already include tax, the total does not change — instead you show how much of it is tax. With the same $100.00 and 20%:
Subtotal excl. tax $83.33
Tax 20% (included) $16.67
Total $100.00
  • Tax = total × rate ÷ (100 + rate) = 100 × 20 ÷ 120 = 16.666… → 16.67
  • Subtotal excl. tax = total − tax = 100.00 − 16.67 = 83.33

Note that the tax is not 20% of $100 — that would be $20 and would overstate it. The rate applies to the amount before tax, which is the part you have to work back to.

Whichever method you use, say it on the document: "All prices include VAT" or a "Subtotal" and "Tax" line that makes it obvious tax is added.

No tax vs. tax at 0%

These are different statements:

  • No tax line — the quote says nothing about tax. Use it when tax does not apply to you or to this sale, or when you deal with it elsewhere.
  • Tax at 0% — the quote explicitly shows a tax line of zero. Some businesses must show this, for example for zero-rated goods.

Do not use 0% as a shortcut for "no tax" unless you mean to show it.

Rounding

Money has a fixed number of decimal places — two for dollars and euros, none for Japanese yen, three for Kuwaiti dinar. Draftelio rounds:

  1. each line amount and each line discount to the currency's decimals;
  2. the tax on each total, once, to the currency's decimals.

Halves are rounded up (0.005 → 0.01). Because tax is calculated once on the total rather than per line, the tax figure always matches the subtotal shown on the page. Example with 8.875% tax:

  • Line 1: 1.5 hours × $33.335 = $50.0025 → $50.00
  • Line 2: 3 × $19.99 = $59.97, discount 12.5% = $7.49625 → $7.50, amount $52.47
  • Subtotal: $102.47; tax: 102.47 × 8.875% = 9.0942… → $9.09; total $111.56

Keep one-time and monthly totals apart

If a quote has a monthly fee — support, a subscription, rental — calculate it as a separate block with its own subtotal, tax and total:

One-time
Subtotal $2,680.00
VAT 21% $562.80
Total one-time $3,242.80

Monthly
Subtotal $49.90 /mo
VAT 21% $10.48 /mo
Total per month $60.38 /mo

Never add $3,242.80 and $60.38 into a single "total" — it is not a number the client will ever pay.

Checklist

  • Discounts are shown per line, with the original amount visible.
  • Tax is calculated after discounts.
  • The document says whether prices include or exclude tax.
  • The tax line names the tax and its rate ("VAT 21%", "Sales Tax 8.875%").
  • One-time and monthly payments have separate totals.
  • The numbers on the page add up exactly — the client can check them with a calculator.

Let the builder do the arithmetic

In the free quote builder you set a discount on any line, switch tax on, choose its name and rate (decimals allowed), and select whether your prices include or exclude it. Subtotals, tax and separate one-time and monthly totals update as you type and appear the same way in the PDF.

For the rest of the document, see what to include in a business quotation.

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