Trade discount and quantity discount are important pricing tools used in buying and merchandising because they influence the cost at which retailers acquire merchandise, the selling price of products, profit margins, inventory decisions, and relationships between buyers and suppliers. Although both discounts reduce the price payable by the buyer, they differ in their purpose, basis, timing, and impact on merchandising decisions. A trade discount is a reduction in the listed or catalogue price of merchandise offered by a supplier to a business buyer because of the buyer’s position in the distribution channel. It is generally given to wholesalers, retailers, distributors, or other trade customers rather than to ordinary consumers. The main purpose of a trade discount is to support the commercial relationship between manufacturers, suppliers, and retailers. For example, if a manufacturer lists a product at ₹1,000 and gives a retailer a 20% trade discount, the retailer pays ₹800. The ₹200 reduction is the trade discount. In buying and merchandising, trade discounts are particularly significant because retailers normally purchase products for resale. The discount reduces the retailer’s acquisition cost and therefore creates an opportunity to earn a margin when the product is sold to the final consumer. The discount may also compensate the retailer for performing important distribution functions such as storing merchandise, displaying products, promoting brands, handling customers, and bearing inventory risks. Trade discounts may vary according to the type of buyer, product category, market conditions, or the buyer’s position in the distribution system. A large established retailer may receive different trade terms from a small retailer because of its purchasing relationship or market importance. However, a trade discount is generally connected with the trading relationship rather than simply with the quantity purchased in a single transaction. A quantity discount, on the other hand, is a reduction in price offered because the buyer purchases a larger quantity of merchandise. Its primary purpose is to encourage bulk purchasing. Suppliers provide quantity discounts because large orders can reduce their selling, packaging, transportation, order-processing, and administrative costs. At the same time, buyers benefit from a lower average purchase price per unit. For example, a supplier may sell a product at ₹100 per unit for an order of 100 units but offer the product at ₹90 per unit if the