trade discount

A trade discount is a discount that does not appear in the price list, but the discount is specific to each customer. For example, if there is a company that has customers who buy products worth $1 million annually, another buys $500,000 annually, and another buys $100,000 annually, the company may give a trade discount to the customer. Whoever buys a value of more than one million dollars annually, a trade discount of 20 percent, and whoever buys a value of 500 thousand dollars annually, 10 percent, is called a trade discount because it is given based on the volume of the transaction or the nature of the customer, and the discount is calculated in the sales invoice based on a previous agreement.

- Used to explain the concept in accounting and business contexts.
- Used when training staff or documenting procedures and policies.

- Example: Teams reference **trade discount** when defining terms in manuals, policies, or training materials.

- Why it matters: Improves clarity and consistency across documentation and decision-making.