There are many purposes for discounting, including to increase short-term sales, to move out-of-date stock, to reward valuable customers, to encourage distribution channel members to perform a function, or to otherwise reward behaviors that benefit the discount issuer.Some discounts and allowances are forms of sales promotion.Discounts and allowances are reductions to a basic price of goods or services.They can occur anywhere in the distribution channel, modifying either the manufacturer's list price (determined by the manufacturer and often printed on the package), the retail price (set by the retailer and often attached to the product with a sticker), or the list price (which is quoted to a potential buyer, usually in written form).Examples of these functions are warehousing and shelf stocking.
Trade discounts are given to try to increase the volume of sales being made by the supplier.
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Trade Discounts are deductions in price given by the wholesaler or manufacturer to the retailer at the list price or catalogue price.
Cash Discounts are reductions in price given to the debtor to motivate the debtor to make payment within specified time.