Discounts and allowances

Discounts and allowances are modifications to the basic price. They could modify either the manufacturers list price (which is a price determined by the manufacturer and often printed on the package), the retail price (which is 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). The market price (also called effective price) is the amount actually paid. The purpose of discounts is to increase short-term sales, move out-of-date stock, reward valuable customers, or encourage distribution channel members to perform a function. Some discounts and allowances are forms of sales promotion.

Related Topics:
Price - Product - Distribution channel - Sales promotion

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