What is Trade Discount?
A trade discount is a reduction in the list price of a product or service offered by a manufacturer or wholesaler to a retailer or distributor. It is a common practice in business-to-business (B2B) transactions and is used as a promotional tool to incentivize bulk purchases, foster long-term relationships with buyers, or reward certain customer behaviors.
Trade discounts are typically expressed as a percentage off the list price, although they can also be specified as a fixed amount per unit. These discounts are negotiated between the seller and the buyer and are often based on factors such as the volume of purchases, the frequency of orders, or the buyer's status in the distribution channel.
The purpose of a trade discount is to encourage larger orders or repeat business from wholesalers, retailers, or other intermediaries in the supply chain. By offering discounts, manufacturers and wholesalers can attract more customers, increase sales volume, and improve market share.
How to Calculate Trade Discount?
Trade Discount calculator uses Trade Discount = multi(List Price,Trade Discount Rate) to calculate the Trade Discount, The Trade Discount is the amount by which a manufacturer or wholesaler reduces the price of a product when it sells the product to a reseller. Trade Discount is denoted by TD symbol.
How to calculate Trade Discount using this online calculator? To use this online calculator for Trade Discount, enter List Price (LP) & Trade Discount Rate (TDR) and hit the calculate button. Here is how the Trade Discount calculation can be explained with given input values -> 150 = multi(1000,0.15).