7

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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5
  • 2
    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
  • This is a poor place to ask this question. While this is a question of definitions, it's not really an "English" question. That is, you wouldn't come here to ask questions about legal terms that required lawyers to answer or about medical terms that required doctors to answer properly. Likewise, you need to ask this question to people who know about business... not grammar experts.
    – BVernon
    Mar 10 '17 at 18:35
  • Well I'm confused. The gross price seems clear enough. I thought I knew the answer to what the net price was too. But google hits have contradictory results. This one says it's the price after VAT has been subtracted from the gross price, but before deductions. But the link you gave and e.g. this one says it's the gross price minus both VAT and deductions, i.e. what the customer pays.
    – S Conroy
    Jun 1 '19 at 12:09
  • As MT_Head explained VAT is calculated after discount. The problem is that you specify VAT as absolute value while it is usually given as vat rate in percents. So, the calculations should be: 100 - 5 = 95 - discounted price; 95 * (1+0.1) = 104.5 - price for customer to pay. Where 0.1 is 10% Vat rate. As with regard to naming I think there is a mess. I am currently doing site for grocery store and the names seem to be: 100 - nett price, 95 - gross price, 104.5 - total.
    – alehro
    May 21 at 11:28
10

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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2
  • Helpful answer.
    – Denis
    Jan 9 '14 at 12:34
  • I don't think the sources are strong enough to claim that "net price" or "gross price" have that meaning. As you already state, there are already terms for those meaning (price before/after taxes).
    – Antonio
    May 31 '16 at 14:59
3

The first two answers above are not on point, the third is just wrong. The answer to the original question is a simple "Yes."

For the question, it doesn't matter how tax (or service charge) is calculated, we know it's $10. Similarly it doesn't matter whether the discount is applied before or after tax, we know it's $5.

According to the opening statement: The gross price is the price before deductions. The net price is the price after deductions [and, by the way, the price you pay].

Thus, exactly as posed: $100 -> initial price $110 -> gross price $105 -> net price [price paid]

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1
  • The difference of the net and the gross should be the VAT.
    – Taemyr
    Mar 18 '19 at 13:31

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