Different methods to find percentage of value, which is correct? I know this may be a bit of a 'go back to school' question but today I had an issue with one of my clients regarding a 20% deposit.
The total that was due for the services was £1350. I normally take a 20% deposit for all services.
I usually work out 20% like this:
0.2 * 1350 = 270
I told the customer he owed me £270 as that is 20% of £1350
My customer argued that I am working out the 20% wrong and that the deposit is in fact £225
He explained that he worked it out like this:
1350 / 1.20 = 1125
1350 - 1125 = 225
I'm pretty sure we are both working it out right here but in slightly different ways, so am I doing anything wrong with my way here?
I have always used my method, I have a feeling he is using a method that usually involves VAT calculations.
What is the essential difference between these two methods?
 A: Your way calculates 20% of the £1350 (alternatively you could go £1350 x 1.2, which is the same as adding 0.2 on)
His way is calculating 20% on the £1125, like if he wanted to know the price of the service before VAT (he's effectively saying 1.2 x £1125 = £1350)
I'd venture to say your way is correct, as I assume you are charging on the total (including VAT)
A: You know that 20% is equivalent to $\frac{1}{5}$, so if you add the result of your 20% calculation to itself 5 times, you should get the original amount.
270 + 270 + 270 + 270 + 270 = 1350
225 + 225 + 225 + 225 + 225 = 1125
So you see that your calculation is correct. Why does your customer's calculation seem correct? He is finding the original amount after a 20% markup. For example, let's say I sell widgets at retail. I add 20% to the price I pay for the widgets (in order to pay my overhead, make a profit, etc.). The amount I sell a widget for is 1.2 times the amount I pay wholesale. So if my customer wants to know how much I paid for the widget, they divide the cost by 1.2 (as your customer did). The quotient is the original price; the difference is the total amount of markup. Does that make sense?
Your customer was actually calculating $\frac{1}{6}$ of the cost of services and telling you it was $\frac{1}{5}$. If your customer should know better, then I would avoid doing business with them in the future.  
