Copyright

Trade Discount: Definition & Formula

An error occurred trying to load this video.

Try refreshing the page, or contact customer support.

Coming up next: What is a Sole Proprietorship? - Definition, Advantages, Disadvantages & Examples

You're on a roll. Keep up the good work!

Take Quiz Watch Next Lesson
 Replay
Your next lesson will play in 10 seconds
  • 0:01 What Is a Trade Discount?
  • 1:32 Calculating Trade Discount
  • 2:38 Lesson Summary
Add to Add to Add to

Want to watch this again later?

Log in or sign up to add this lesson to a Custom Course.

Login or Sign up

Timeline
Autoplay
Autoplay
Speed

Recommended Lessons and Courses for You

Lesson Transcript
Instructor: Tara Schofield
This lesson discusses the benefits of trade discounts. We will define the term, look at a few examples of trade discounts and explore how to calculate trade discount.

What Is a Trade Discount?

A trade discount is a discount that is taken off of the retail or published price of products. Such discounts are often offered to companies that buy in bulk or meet the conditions of a special. This discount could also be offered on services. For instance, shipping companies frequently offer trade discounts to customers who ship a high volume of shipments. Think about Amazon.com and the huge volume of packages they ship on a daily basis. Because they have such high volume, shipping companies will offer substantial trade discounts to Amazon in hopes of becoming their selected shipper.

As mentioned, trade discounts may also apply to bulk purchases. These purchases may be a one-time buy but with a substantial savings offered for purchasing the items. These discounts are typically used for large items, close-out products, or items that are purchased in large quantities.

Trade discounts can be offered on everything from items used for manufacturing to office supplies. By offering a trade discount, companies are trying to secure repeat, consistent business. Let's say you own a business with a large number of office employees and your company uses a significant amount of office supplies and copy paper. Your local supply company has contacted you and wants to be your main office supply provider. They have offered you a 30% discount on all products purchased if you meet their minimum amount. You know you will qualify for the trade discount. Because their prices are fair to begin with, the trade discount is the incentive you need to decide to purchase from this company.

To unlock this lesson you must be a Study.com Member.
Create your account

Register to view this lesson

Are you a student or a teacher?

Unlock Your Education

See for yourself why 30 million people use Study.com

Become a Study.com member and start learning now.
Become a Member  Back
What teachers are saying about Study.com
Try it risk-free for 30 days

Earning College Credit

Did you know… We have over 160 college courses that prepare you to earn credit by exam that is accepted by over 1,500 colleges and universities. You can test out of the first two years of college and save thousands off your degree. Anyone can earn credit-by-exam regardless of age or education level.

To learn more, visit our Earning Credit Page

Transferring credit to the school of your choice

Not sure what college you want to attend yet? Study.com has thousands of articles about every imaginable degree, area of study and career path that can help you find the school that's right for you.

Create an account to start this course today
Try it risk-free for 30 days!
Create An Account
Support