Reduction - If a purchased item is defective, the buyer has the right to a reduction in price (§ 437 No. 2 BGB) in addition to the possibility of withdrawing from the contract and (in the event of negligence) of compensation. The amount of the reduction does not result from the difference between the purchase price and the current objective value of the defective item; Rather, the purchase price is to be reduced in the ratio in which the item sold was in a fault-free condition at the actual value at the time of the conclusion of the contract (Section 441 (3) BGB).
Example: The item sold at a price of EUR 330 would have been worth EUR 300 in a defect-free condition; in a defective condition its value is only EUR 200; according to the formula "purchase price at reduced purchase price = value of the defect-free item at the value of the defective item" results in a reduced purchase price of EUR 220.
The reason why the current objective value of the thing does not simply determine the extent of the price reduction is that the contracting partner who has done favorably as a seller or buyer wants to receive the benefits of his business even with the reduction.