Trade Discount

Accounting Dictionary

Trade Discount

A trade discount is a reduction in price given by a wholesaler to a retailer. Often, the more product a retailer buys, the larger discount the manufacturer is willing to give.

ABC Company sells laundry detergent. If a grocery store buys one case, the price is $12.00; if they buy 10 cases the price is $11.50; if they buy 100 cases the price is $11.00. This would be a trade discount.

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