Price Discounts and Allowances Homework Help

The Types of Discounts and Allowances

The “Discounts” and “Allowances” are two very important concepts in the distribution and selling of products. The market that you exist in today is extremely competitive and in order to survive here, it is very important to be able to compete with your goods and services. It is therefore necessary to provide discounts and services that will help in an easy sale of your company products.

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Types of Discounts

  • Cash Discount

If a customer buys products from the seller and pays him or her immediately, then a certain amount of discount is given to those customers. Those discounts are known as Cash Discounts.

  • Trade Discount

These types of discounts are given by manufacturers to retailers and whole sellers in order to encourage them in buying their goods or services. These retailers have a major role to play in selling and buying process because they are the ones who store the goods, collect necessary market information and keep all necessary records.

  • Quantity Discount

If the customer buys a lot of goods together then he or she is given a sort of discount that is known as Quantity Discount.

  • Seasonal Discount

This is an offseason discount that is given to customers for buying products and services during the off season. For example if you buy woolen garments during summer season then you often get this type of a discount.

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Types of Allowances

  • Promotional Allowance

There is a certain type of an allowance that the manufacturers give to retailers and whole sellers for different types of promotional activities like decorating, advertising and also displaying goods in their outlets. These allowances are given either in the form of cash or by reducing prices of goods.

  • Trade in allowance

Customers who buy goods from a particular company are often allowed to return the goods that do not get sold. This encourages customer loyalty towards a particular firm. This allowance is referred to as trade in allowance.

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