Question
Quantity Discount and Trade Discount
Answer :
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Skip in 10
Quantity discount and trade discount are two important pricing practices used by businesses to encourage sales and improve distribution efficiency. Both discounts reduce the effective price paid by buyers, but they differ in their purpose, basis, and application. In marketing, discount policies are used as part of pricing strategy to attract customers, increase sales volume, strengthen relationships with intermediaries, and improve market competitiveness. A quantity discount is a reduction in the price offered to a buyer when the buyer purchases a large quantity of a product. The basic principle behind this discount is that the cost of processing, packaging, transporting, and selling each unit may decline when products are purchased in larger quantities. Therefore, sellers share part of the cost savings with buyers in the form of lower prices. Quantity discounts can be based on the number of units purchased or the total value of the order. For example, a manufacturer may charge ₹100 per unit when a retailer purchases fewer than 100 units, but the price may fall to ₹95 per unit for an order of 100–499 units and ₹90 per unit for 500 units or more. This encourages buyers
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