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http://wiki.answers.com/Q/What_does_gross_price_and_net_price_mean

The gross price is the price before deductions. The net price is the price after deductions.

If a something is $100, and:
VAT + service charge = $10
Discount = $5

Then:
$100 -> initial price
$110 -> gross price
$105 -> net price

Is that right?

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I don't know how VAT is calculated, but I'm going to guess that it follows the same rule as sales tax in California, USA: the tax is calculated on the actual amount paid by the customer, not on the (possibly mythical) list price. So the discount should be applied before the tax is calculated. If VAT works differently, my apologies. Also (and here it's entirely possible that VAT is different), sales tax applies only to goods, not to services. So: Gross price - discount = net price, plus tax, plus service charge, equals final amount (AKA "grand total".) –  MT_Head Jun 20 '11 at 9:16
    
@MT_Head: Your assumption about the discount and VAT is correct, though from the customer's point-of-view it makes little difference. Most services are subject to VAT (though genuine tips/gratuities are not). –  Henry Jun 20 '11 at 10:52

1 Answer 1

up vote 3 down vote accepted

Taken from here:

The net price is the price pre-tax, and the gross price should be the price including tax.

backed up by here:

you know a price after tax (the Gross price)
but want to find out the price before tax (the Net price).

So, I would say that :

$100 = initial price
$110 = Gross price
$100 = Net price.
$95 = Discount price
$105 = Total price

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Helpful answer. –  Denis Jan 9 at 12:34

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