‘

Business, to be successful,
must be based on science, for
demand and supply are matters
of mathematics, not

- Elbert guesswork.

Hubbard
MICHAEL R. DE LEON, SPST-
I
‘ Trade
Discounts
MICHAEL R. DE LEON, SPST-
I
 The Merchandising
Manufacturer
Chain
Goods move from a Distributor
manufacturer to the ultimate
consumer through the Wholesaler
distribution chain or
merchandising chain. Retailer

Consumer
 The Merchandising Manufacturer
Chain
In many cases, one or more of Distributor
the intermediate links may be
absent. Large national retailers
and buying groups of smaller Wholesaler
retailers may have enough
buying power to purchase Retailer
directly from manufacturers.
Consumer
 The Merchandising
Chain
• To understand how prices are usually established within the
merchandising chain, imagine that you are a wholesaler buying
from a distributor.
• The distributor is likely to have a catalogue of list price. List
prices are commonly chosen to approximate the ultimate retail
selling price.
• The distributor will offer you a percent discount from the list price
called the trade discount rate.
• The word trade signifies that the discount applies only to a
transaction within the trade, that is within the merchandising chain
(but not including the consumer).
 Computing the Net Price after a
Discount
The resulting price after deducting the amount of
the trade discount from the list price is called the
net price. That is,

Net price = List price – Amount of trade discount

or
Net price = List price – (Rate of trade discount x
List price)
 Computing the Net Price after a
In symbols: Discount
or

where,
net price
list price
rate of discount (in decimals)
trade discount amount
 Calculating the Discount
and Net
Amount Price
Example 1:

A wholesaler lists an item at PHP117 less 20%.

What is the amount of the discount and the net price
to a retailer?
 Calculating the Discount
and Net
Amount Price
Example 2:

A 37.5% trade discount on a camera which list price

is PHP49,500. Determine the trade discount amount
and the net price.
 Calculating the Discount
and Net
Amount Price
Example 3:

The distributor of Nikita power tools is offering a

trade discount of 38% to hardware stores. What will
be amount the stores pay to purchase a rotary saw
listed at PHP27,100?
 Calculating the List Price
Example 1:

After a trade discount of 30%, a wholesaler is able

to purchase windshield wiper blades for a net price
of PHP1,200.00. Determine the amount of trade
discount and the list price.
 Calculating the List Price
Example 2:

The net price of a product after a trade discount of

15% is PHP845.75. Compute for the list price and
the amount of the trade discount.
 Calculating the List Price
Example 3:

Paclauna store buys their packs of coke mismo at a

local distributor. Each pack of coke mismo is
discounted at 30%. If the store pays PHP200 per
pack, what is the list price and the amount of trade
discount of the said goods?
 Calculating the Trade
Rate
Discount
Example 1:

A clothing store is able to purchase men’s leather

coats at a net price of PHP2,500 after a discount of
PHP800. what rate of trade discount was obtained?
 Calculating the Trade
Rate
Discount
Example 2:

Niagara Dairies gives convenience stores a discount

of 24% on butter listed at PHP155 per box. What
rate of discount will Silverwood Milk Products have
to give on its list price of PHP179 per box to match
Niagara Dairies’ price to convenience stores?