Discount Pricing

Discounts and Allowances Cash discounts Quantity discounts Trade discounts Seasonal discounts Special allowances

Cash Discounts Offered to encourage quick payment Terms 2/10, n/30 means Pay within 10 days of the date of the invoice, and you may deduct 2% off the price Otherwise, net or n is due within 30 days of the date of the invoice

Quantity Discounts Large orders receive bigger discounts The more you buy, the less you pay Could be the same item or different items Example: 1-24 = $1.00 each 25-48 = $.95 each 49-72 = $.90 each Prom products

Employee Discounts Sometimes given as a perk for being employed at that business Usually varies between 10 and 30% Can be a certain dollar figure

Assignment Discount Pricing Worksheet 2 Employee discount problems (marketing math workbook p. 92)

Trade Discounts Not really discounts, but a way to quote prices Granted to wholesalers and retailers for performing for that trade or company Multiple the price by the discount amount and subtract from the price $40 X 10% = $4 discount; Price is $40-$4 = $36

Series Discounting Sometimes trade discounts are offered in a series. For example, if a wholesaler was offered trade discounts of 20% and 10%, you would first determine the 20% and then take 10% off of that amount. It would not be a 30% discount total.

For example Price of a product is $5,700 and the trade series discounts are 20% and 10% Take 20% off Either do 20% X 5700 = 1140, and then 5700-1140=4560 OR 80% X 5700 = 4560 Then, take 10% of 4560 What is the final amount due for the product?

Seasonal Discounts Purchased outside the customary season Reduce costs by selling at lower price instead of paying the cost for warehousing Figured the same as a trade discount

Promotional Discounts and Allowances To wholesalers and retailers Willing to advertise or promote a manufacturer’s product Could be free merchandise to sell or a price reduction in the cost For instance, a retailer offers to do an aisle display of the product in exchange for a discount or the manufacturer offers a shelving allowance. Divide the dollar discount by the original price. The answer will be a decimal. Change the decimal to a percentage.

Figuring a Promotional Discount $10,000 Price $250 discount Divide the discount amount by the price 250/10,000 =.025 (convert to percentage) 2.5%

For example Suppose you are a retailer, and the manufacturer offers you a 10% promotional allowance for shelving their product prominently. You buy $30,000 worth of the merchandise. What is your cost? Suppose you are a retailer and it is cheaper to discount your valentine candy than it is to send it back to your supplier. You price candy hearts that were $1.00 at .65. What is the promotional discount you are offering?

Promotional Discounts and Allowances Offered to consumers also in the form of Rebate Trade Ins Coupons

Assignment Students should complete Practice 7 on p. 579 Handout Problems (from MM workbook) P. 89 Series discounts #95, 96, 97, 98 P. 91 Promotional discounts #103 (net amount payable only) P. 91 #105