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Discount Pricing: - Involves Deduction From The Published Price List
Discount Pricing: - Involves Deduction From The Published Price List
Trade discount
Account for benefits derived from dealing with various groups of customers or middlemen Discounts afforded should cover the operating costs Must be non discriminatory and cost justified (Robinson-Patman act) Eg. Discounting in OEMs
Quantity discounts
An incentive offered to a buyer that results in a decreased cost per unit of goods when purchased in greater numbers Encourage volume purchasing and maintain brand loyalty
Cumulative discounts:
Reducing market expense Reduce competitive pressure
Noncumulative discounts:
Encourage large individual orders Reduce costs of storage and order processing
Examples: Buy five for the price of four and buy one get one free
Cash discounts
Deduction in payable amount of debtors Encourage rapid payment Allow for a better cash flow Problem may arise when large buyers pay their bills beyond the due date and still demand the discount rates
Geographical pricing
Modifying a basic list price based on the geographical location of the buyer Important to remain competitive in market Handling shipping costs on the basis of weight to value ratio