Trade discount and quantity discount are two important forms of price reduction used in buying and merchandising. Although both reduce the amount paid by a buyer, they differ in their purpose, basis, timing, and effect on purchasing decisions. Understanding the distinction is important for buyers and merchandisers because discounts directly influence product cost, profitability, inventory planning, and vendor relationships. A trade discount is a reduction in the listed or catalogue price of goods offered by a manufacturer or supplier to a business buyer. It is generally provided because of the buyer’s position in the distribution channel, such as being a wholesaler, retailer, or authorized dealer. The main purpose of a trade discount is to compensate intermediaries for performing functions such as purchasing, storage, transportation, promotion, and selling. For example, if a supplier lists a garment at ₹1,000 and offers a retailer a 20% trade discount, the retailer purchases it for ₹800. The discount is