<?xml version="1.0"?>
<config>
  <modules>
    <TimgMage_CustomAddToCart>
      <version>0.0.1</version>
    </TimgMage_CustomAddToCart>
  </modules>
  <global>
    <models>
      <TimgMage_CustomAddToCart>
        <class>TimgMage_CustomAddToCart_Model</class>
      </TimgMage_CustomAddToCart>
    </models>
    <events>
      <!-- START: Add to cart actions -->
      <checkout_cart_product_add_after>
        <observers>
          <timgmage_customaddtocart_model_observer>
            <class>TimgMage_CustomAddToCart_Model_Observer</class>
            <method>checkoutCartProductAddAfter</method>
            <type>singleton</type>
          </timgmage_customaddtocart_model_observer>
        </observers>
      </checkout_cart_product_add_after>
    </events>
  </global>
</config>

<?php

    class TimgMage_CustomAddToCart_Model_Observer
    {

        public function checkoutCartProductAddAfter(Varien_Event_Observer $observer) {

            Mage::log('Entered to checkoutCartProductAddAfter.', null, 'timgmage.log');

            /* @var $item Mage_Sales_Model_Quote_Item */
            $item = $observer->getQuoteItem();
            if ($item->getParentItem()) {
                $item = $item->getParentItem();
            }

            // Discounted 25% off
            $percentDiscount = 0.25;

            // This makes sure the discount isn't applied over and over when refreshing
            $specialPrice = $item->getOriginalPrice() - ($item->getOriginalPrice() * $percentDiscount);

            // Make sure we don't have a negative
            if ($specialPrice > 0) {
                $item->setCustomPrice($specialPrice);
                $item->setOriginalCustomPrice($specialPrice);
                $item->getProduct()->setIsSuperMode(true);
            }
        }
    }