1. Discount Pricing

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

3. 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

4. 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

5. 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

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

7. 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

8. 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.

9. 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 =4560
OR 80% X 5700 = 4560
Then, take 10% of 4560
What is the final amount due for the product?

10. 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

11. 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.

12. 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%

13. 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 What is the promotional discount you are offering?

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

15. 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