Trade Discount

Trade discount is one way of increasing sales because it encourage the buyer to purchase the product at low prices. Trade discount and cash discount is same way, this two enables the supplier to vary prices periodically without the inconvenience of revising price list.

Example:

Game plan marketing quoted a list price of 2,500 for each Ipod nano, less a trade discount of 20%. if the open space media company, ordered 10 units, the invoice price would be as follows.

List price (2,500 x 10 )            25,000.00
Less: 20% trade discount         5,000.00
Invoice price                            20,000.00